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  • Net Present Value

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    Harish Yadav
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    The document contains two examples of net present value (NPV) and internal rate of return (IRR) calculations for potential projects. The first project has a positive NPV at a 25% interest rate, so it is acceptable. The second project has an IRR of 19% which exceeds the cost of capital of 15%, so that project is also acceptable. Both examples use the NPV and IRR metrics to evaluate projects and determine if they should be accepted for investment.

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    SEC.xlsx

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    The document contains two examples of net present value (NPV) and internal rate of return (IRR) calculations for potential projects. The first project has a positive NPV at a 25% interest rate, so it is acceptable. The second project has an IRR of 19% which exceeds the cost of capital of 15%, so that project is also acceptable. Both examples use the NPV and IRR metrics to evaluate projects and determine if they should be accepted for investment.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    11 views2 pages

    Net Present Value

    Uploaded by

    Harish Yadav
    The document contains two examples of net present value (NPV) and internal rate of return (IRR) calculations for potential projects. The first project has a positive NPV at a 25% interest rate, so it is acceptable. The second project has an IRR of 19% which exceeds the cost of capital of 15%, so that project is also acceptable. Both examples use the NPV and IRR metrics to evaluate projects and determine if they should be accepted for investment.

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    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    of 2

    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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