Question
Consider a project with the following cash flows: CF0 = -$600, CF1 = $1,110, CF2 = $700, CF3 = -$600, and CF4 = -$1, 200.
Consider a project with the following cash flows: CF0 = -$600, CF1 = $1,110, CF2 = $700, CF3 = -$600, and CF4 = -$1, 200. Use Excel to answer the following questions:
(a)Calculate the internal rate of return of this investment opportunity. Would you pursue this project if the opportunity cost of capital is 10%? 50%? 60%?
(b)Calculate the NPV of this investment opportunity under discount rate of 12%. Would you accept this project based on the NPV rule?
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Contemporary Financial Management
Authors: James R Mcguigan, R Charles Moyer, William J Kretlow
10th Edition
978-0324289114, 0324289111
