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You have a project that has an initial cash outflow of -$20,000 and cash inflow of $6,000, $5,000, $4,000, and $3,000, respectively, for the next four years. If the required return is 12 percent, what is the IRR of the project? The NPV?

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facundobuzzetti

Answer:

IRR= -4.57%

NPV= -5,903.21

Explanation:

Giving the following information:

Cf0= -20,000

Cf1= 6,000

Cf2= 5,000

Cf3= 4,000

Cf4= 3,000

Rate of retun= 12%

To calculate the project IRR and NPV, we need to use the financial calculator:

Function= Cash

I%= 12

1= -20,000

2= 6,000

3= 5,000

4= 4,000

5= 3,000

IRR= SOLVE = -4.57%

Now, back to I%= 12;

NPV= SOLVE = -5,903.21

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