Question
Company wants to invest $45,000,000. WACC is estimated at 15%. years 1 2 3 4 5 6 Project 1 -5 000 000 5 000 000
Company wants to invest $45,000,000. WACC is estimated at 15%.
| years | 1 | 2 | 3 | 4 | 5 | 6 |
| Project 1 | -5 000 000 | 5 000 000 | 10 000 000 | 20 000 000 | 30 000 000 | 30 000 000 |
| Project 2 | 12 000 000 | 12 000 000 | 12 000 000 | 12 000 000 | 12 000 000 | 11 500 000 |
| WACC | 15% |
| Investment | $45 000 000 |
Calculate the IRR
How can the IRR for both projects be 15% when the WACC is set for 15% in the first place. When I use the Excell function for IRR, it gives me 170% for project 1 and an error for project 2 as it has no negative cash flows..
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Cryptoassets The Innovative Investors Guide To Bitcoin And Beyond
Authors: Chris Burniske ,Jack Tatar
1st Edition
1260026671, 126002668X, 9781260026672, 9781260026689
