An investment cost $10,000 with expected cash flows of $3,000 for 5 years. The discount rate is 15.2382%. The NPV is ______ and the IRR is ______ for the project.
A) $0; 15.2382%
B) $3.33; 27.2242%
C) $5,000; 0%
D) Can not answer without one or the other value as input.
E) None of these.

Question

Quizplus · Accepted Answer

The NPV is $0 because the present value of the cash flows is equal to the initial investment. The IRR is 15.2382% because this is the discount rate that makes the NPV equal to zero.

An Investment Cost $10,000 with Expected Cash Flows of $3,000