A firm is thinking about where to invest in this project based on the following information....
A firm is thinking about where to invest in this project based
on the following information.
1. The initial year investment will be 1,500,000
2. Year 1 OCF will be 150,000
3. OCF will grow by 5% annually into the indefinite future.
4. The required return is 15%
Find the NPV nad IRR.
Homework Answers
1.
NPV=-Initial Investment+Expected OCF/(required return-growth
rate)=-1500000+150000/(15%-5%)=0
2.
IRR=15% as NPV is zero at 15%
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A firm is thinking about where to invest in this project based
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