I dont know the functions of the boxes but these are the right answers. What are the short cut NPV IRR formulas etc and which boxes to select

18. An investment is expected to produce the following annual year-end cash flows: year 1: $5,000 year 2: $1,000 year 3: $0 year 4: $5,000 year 5: $6,000 year 6: $863.65 The investment will cost $13,000 today a. Will this investment be profitable? b. What will be the IRR (compounded annually) on this investment? C. Prove you r answer n (b) by showing how much of each year's cash flow is recovery ofthe $13,000 investment and how much of the cash flow is return on investment. (Hint: See Exhibit 3-13 and Concept Box 3.22.) only b and c please th:x Expert Answer Anonymous answered this r answer Was this answer helpful?o Answer b IRR is the rate of retuen where present value of cash flow We have to use trial and error method to compute IRR. Lets use 8% as rate to compute NPV fo the cash flow PV of cash outflow- Means NPV is zero. cash flow PVIF @8% 6000 863.65 0.9259 0.8573 0.7938 0.7350 0.6806 0.6302 5000 1000 S000 1.0000 (13,000.00) 4,629.63 857.34 3,675.15 4,083.50 544.25 789.86 Since NPV is positive at 8% means IRR will be higher than 8%. Lets use 12% and compute NPV cash flow PVIF @12% 13000 6000 863.65 0.8929 0.7972 0.7118 0.6355 0.5674 0.5066 5000 (13,000.00) 4,464.29 797.19 3,177.59 3,404.56 437.55 (718.82) Since NPV at 12% is negative, this means NPV is between 8% and 12% we can use below formula to compute IRR IRR Lower rate (Lower rate NPV/(Lower rate NPV-Higher rate NPV))*Difference in rate -89H(790/(790-719)).4% 1096 Since NPV at 12% is negative, this means NPV is between 8% and 12% we can use below formula to compute IRR IRR = Lower rate +(Lower rate NPV/(Lower rate NPV-Higher rate NPV) *Difference in rate -8%.((790/( 790-719)"496 10% Hence, IRR is 10% Answerc 11-I * 1096 return on investment |@10% total cash recovery flow Balance at investment 13 rated investmen the end 1,300 930 923 3,700 70 9,300 10,153 168 785 923 10,153 6,168 785 1.015 5,000 3 617 79 3,985 5,383 785 864