You are provided with the following cash flows on a project: Year Operating (predebt) cash flows ($)

Question:

You are provided with the following cash flows on a project:

Year Operating (predebt) cash flows ($)

0 ………………………………………….. −10,000,000

1 ………………………………………….. 4,000,000

2 ………………………………………….. 5,000,000

3 ………………………………………….. 6,000,000

Plot the net present value (NPV) profile for this project.

What is the IRR? If this firm had a cost of capital of

10% and a cost of equity of 15%, would you accept this project?

Net Present Value
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