Question
You have 3 projects with the following cash flows: Year: 0 1 2 3 4 Project 1: -$ 148 $ 20 $ 42 $ 60
You have 3 projects with the following cash flows:
Year: 0 1 2 3 4
Project 1: -$ 148 $ 20 $ 42 $ 60 $ 81
Project 2: -826 0 0 6,994 -6,510
Project 3: 21 40 58 78 -44
a. For which of these projects is the IRR rule reliable?
b. Estimate the IRR for each project (to the nearest 1 %). c. What is the NPV of each project if the cost of capital is 5 %? 20 %? 50 %?
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Corporate Financial Management
Authors: Julian Ralph Franks, Harry H. Scholefield
2nd Edition
0566020548, 978-0566020544
