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You are planning for a project to give you a return in the next 10 years. Expected costs and returns are presented in the table

You are planning for a project to give you a return in the next 10 years. Expected costs and returns are presented in the table below:

  1. Calculate the Net Present Value (NPV) using a discount rate of 5% and present your decision

2.calculate Net Present Value using a discount rate of 10% and present your decision in the Answer box. [10 points]

3.What decision do you expect if you calculate the Net Present Value using 15% discount rate? Present your answer in the box without calculating the Net Present Value.

4.What is the Internal Rate of Return (IRR)? The calculated IRR for the above project is 7%. What does this mean? How can you use this information to make a decision about the project? [10 points]

Year

0

1

2

3

4

5

6

7

8

9

10

Cost

200,000

100,000

36,100

26,100

26,100

26,100

26,100

26,100

26,100

26,100

26,100

Return

0

30,000

60,000

60,000

66,785

80,000

80,000

80,000

80,000

80,000

60,000

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