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  • W4 NPV and IRR Soln

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    Sabbir Ahmed
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    This document compares two investment options, providing their discount rates, initial investments, cash flows over three years, net present values, and internal rates of return. Option 1 has a 4.5% discount rate, initial investment of $2 million, and cash flows of $550,000, $850,000, and $1.1 million over the three years, with a net present value of $268,612.51 and internal rate of return of 10.73%. Option 2 has a 4.5% discount rate as well, initial investment of $1 million, and cash flows of $420,000, $360,000, and $500,000 over three years, with a net present value of $

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    This document compares two investment options, providing their discount rates, initial investments, cash flows over three years, net present values, and internal rates of return. Option 1 has a 4.5% discount rate, initial investment of $2 million, and cash flows of $550,000, $850,000, and $1.1 million over the three years, with a net present value of $268,612.51 and internal rate of return of 10.73%. Option 2 has a 4.5% discount rate as well, initial investment of $1 million, and cash flows of $420,000, $360,000, and $500,000 over three years, with a net present value of $

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    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    8 views2 pages

    W4 NPV and IRR Soln

    Uploaded by

    Sabbir Ahmed
    This document compares two investment options, providing their discount rates, initial investments, cash flows over three years, net present values, and internal rates of return. Option 1 has a 4.5% discount rate, initial investment of $2 million, and cash flows of $550,000, $850,000, and $1.1 million over the three years, with a net present value of $268,612.51 and internal rate of return of 10.73%. Option 2 has a 4.5% discount rate as well, initial investment of $1 million, and cash flows of $420,000, $360,000, and $500,000 over three years, with a net present value of $

    Copyright:

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

    Investment Opportunities

    Option 1 Option 2
    Discount rate 4.5% Discount rate
    Initial investment -$2,000,000 Initial investment
    Cashflow in the 1st Year $550,000 Cashflow in the 1st Year
    Cashflow in the 2nd Year $850,000 Cashflow in the 2nd Year
    Cashflow in the 3rd Year $1,100,000 Cashflow in the 3rd Year

    Net Present Value $268,612.51 Net Present Value


    Internal Rate of Return 10.73% Internal Rate of Return

    Year Cashflow NPV


    1 $550,000 $526,316
    2 $850,000 $778,370 P / (1 + i)t
    3 $1,100,000 $963,926
    Total NPV $268,612.51
    ption 2
    4.5%
    -$1,000,000
    $420,000
    $360,000
    $500,000

    $169,724.96
    13.01%

    (1 + i)t

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