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Net Present Value

The document contains cash flow information for two potential projects over multiple years. It calculates the net present value and internal rate of return for each project. For the first project, the NPV is positive so the project is acceptable. For the second project, the IRR of 19% exceeds the cost of capital of 15%, so that project is also deemed acceptable.

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Harish Yadav
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33 views2 pages

Net Present Value

The document contains cash flow information for two potential projects over multiple years. It calculates the net present value and internal rate of return for each project. For the first project, the NPV is positive so the project is acceptable. For the second project, the IRR of 19% exceeds the cost of capital of 15%, so that project is also deemed acceptable.

Uploaded by

Harish Yadav
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Year Cash Flow Interest Rate 25%

0 -$12,000.00
1 $4,200.00
2 $4,200.00
3 $4,200.00
4 $4,200.00
5 $4,200.00
6 $4,200.00
7 $4,200.00

Net Present Value $1,276.78

NPV is positive so we can accept the project.

Year Cash Flow


0 -$300,000.00
1 $60,000.00
2 $60,000.00
3 $60,000.00
4 $60,000.00
5 $60,000.00
6 $60,000.00
7 $60,000.00
8 $60,000.00
9 $60,000.00
10 $60,000.00
11 $60,000.00
12 $60,000.00
13 $60,000.00
14 $60,000.00
15 $60,000.00
16 $60,000.00
17 $60,000.00
18 $60,000.00
19 $60,000.00
20 $60,000.00

IRR 19%

Since,IRR is 19% and Cost of Capital is 15%


So,we can accept the investment.

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