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0 1
Now
($10,000) 5,300
Negative sign indicates cash outflows
Positive sign indicates cash inflows
2 COMPUTATION OF IRR
r NPV
0.1 804.38
r 0 By definition, the r that makes NPV =0 , is
0.18 -506.02
CHECK
WACC = r = 15% = 0.15
3 NPV PROFILE
WACC = r = 5% = 0.05
r NPV
0.050 $1,800.73
0.055 $1,693.79
0.060 $1,588.57
0.065 $1,485.03
0.070 $1,383.14
0.075 $1,282.86
0.080 $1,184.15
0.085 $1,086.98
0.090 $991.32
0.095 $897.13
0.100 $804.38
0.105 $713.05
0.110 $623.10
0.115 $534.50
0.120 $447.23
0.125 $361.25
0.130 $276.55
0.135 $193.09
0.140 $110.85
0.145 $29.80
0.150 ($50.07)
0.155 ($128.80)
0.160 ($206.40)
0.165 ($282.91)
0.170 ($358.33)
cash flow timeline
2 3 4
PV of CFs
(10,000.00)
4,818.18
3,553.72
1,407.96
1,024.52
804.38
$804.38
NPV = 804.38
PV of CFs
(10,000.00)
4,491.53
3,088.19
1,140.57
773.68
(506.02)
6.02 - 804.38)
0.6138
0.05
PV of CFs
(10,000.00)
4,608.70
3,251.42
1,232.19
857.63
(50.07)
14.69%
PV of CFs
(10,000.00)
5,047.62
3,900.23
1,618.83
1,234.05
1,800.73
NPV
$2,000.00
$1,500.00
$1,000.00
NPV
$2,000.00
$1,500.00
$1,000.00
$500.00
$0.00
0.040 0.060 0.080 0.100 0.120 0.140 0.160 0.180
($500.00)