Consider a five-year project that costs $20,000 today,which is expected to generate $6,000 at the end of the second year and then the cash flows will increase by $1,000 per year for each of the subsequent years.The cost of capital is 8 percent.What are the project's NPV and IRR?

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Quizplus · Accepted Answer

11ea8229_3480_3a09_bbd8_a1ee863eeef8_TB1726_00 Using a financial calculator (TI BA II Plus):
[CF][2nd][CLR WORK]
CF0=-20,000,C01=0,F01=1,C02=6,000,F02=1,C03=7,000,F03=1,C04=8,000,F04=1,C05=9,000,F05=1,IRR,CPT.

Consider a Five-Year Project That Costs $20,000 Today,which Is Expected