Question

A project has annual cash flows of $8,000 for the next 10 years and then $9,000 each year for the following 10 years. The IRR of this 20-year project is 13.15%. If the firm's WACC is 11%, what is the project's NPV? Do not round intermediate calculations. Round your answer to the nearest cent.

Answer 1

present value of cash inflows at 13.15% discount rate = NPV =0 At IRR, npv = 0

year pv @ 11% ། ཁབ་ལ། ཨ ་ཕབ Calculation of initial investment: year cash flows [pv @ 13.15%[Presentvalue| 0 50.00 58,000 ] 0.88378 ] :7,070.26 $8,000 0.78107 ། 6,248.57 $8,000 0.59030 $5,522.38 $8,000 0.61007 4,880.58 $8,000 0.53917 4,313.37 $8,000 | 0.47651 ， $3,812.03 $8,000 0,42113 $3,369.05 $8,000 0.37213 $2,977.51 $8,000 0.32893 $2,631.47 $8,000 0.29071 $2,325.65 $3,000 0.25632 $2,312.29 $3,000 0.22706 $2,043.56 113 $3,000 0.20067 $1,806.06 $3,000 ། 0.17735 ] $1,596.17 | 115 S9,000 0.15674 $1,410.67 $3,000 0,13852 1,246.72 $3,000 0.1224 1,101.83 $3,000 0.10820 $373.78 $9,000 0.09562 5860.61 $3,000 0.08451 $760.59 Initial investment $57,263.23 cash flows -57,263 $8,000.00 8,000.00 $8,000.00 8,000.00 $8,000.00 8,000.00 $8,000.00 8,000.00 $8,000.00 8,000.00 $3,000.00 $9,000.00 $3,000.00 $3,000.00 $3,000.00 $3,000.00 $3,000.00 $3,000.00 $3,000.00 $9,000.00 0.9009 0.8116 0,7312 0.6587 0,5935 0,5346 0.4817 0,4333 0.3909 0,3522 0.3173 0.2858 0.2575 0,2320 0,2090 0.1883 0.1696 0.1528 0.1377 0,1240 Present value -57,263.23 $7,207.21 $6,492.98 5,849.53 :5,269.85 4,747.61 4,277.13 $3,853.27 $3,471.41 3,127.40 $2,817.48 $2,855.55 $2,572.57 $2,317.63 $2,087.95 1,881.044 $1,634.63 $1,526-69 $1,375.40 1,233.10 $1,116.31 $8,517.49 ། །་་ net present value [ NPV)