Question
Growth Enterprises believes its latest project, which will cost $100,000to install, will generate a perpetual growing stream of cash flows.The cash flow at the end
Growth Enterprises believes its latest project, which will cost $100,000to install, will generate a perpetual growing stream of cash flows.The cash flow at the end of the first year will be $6,000, and cash flows in future years are expected to grow indefinitely at an annual rate of1%.
a) If the discount rate for the project is13%, what is the project NPV?
NPV=
(please round your final result to 2 decimals if necessary)
b) What is the internal rate of return (IRR) for the project?
IRR =%
(Note: the above answer is in terms of percentage. Please round your final result to 2 decimals if necessary)
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