Question
Q1. A project requires an initial investment of $97,737. There will be no cash flow in the first year. Starting in the second year, the
Q1.
A project requires an initial investment of $97,737. There will be no cash flow in the first year. Starting in the second year, the project will generate an annual cash flow of 20,000 for seven years. After the last $20,000, the project is done. However, $9,600 is required to restore the environment in the year after the last $20,000. Assume the required return is 5%. What is the NPV of this project?
Q2.
A project requires an initial investment of $90,000. There will be no cash flow in the first year. Starting in the second year, the project will generate an annual cash flow of 20,000 for seven years. After the last $20,000, the project is done. However, $12,000 is required to restore the environment in the year after the last $20,000. Assume the required return is 5%. What is the modified IRR of this project?
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An Introduction To Socio-Finance
Authors: Jørgen Vitting Andersen, Andrzej Nowak
2013th Edition
3642419437, 978-3642419430
