Corporate Finance Q54
0. Given below are the cash flows for a capital project.
| Year | 0 | 1 | 2 | 3 | 4 | 5 |
| Cash flow | (75,000) | 25,000 | 30,000 | 30,000 | 15,000 | 7,500 |
Assuming the cost of capital is 10 percent, the NPV and IRR are closest to:
| Option | NPV | IRR |
| A | 9,962 | 12.3% |
| B | 5,521 | 15.9% |
| C | 9,962 | 15.9% |
- Option : C
- Explanation : Enter the following values in a financial calculator to determine NPV and IRR: CF0 = -75,000, CF1 = 25,000, CF2 = 30,000, CF3 = 30,000, CF4 = 15,000, CF5 = 7,500, I = 10, CPT NPV. NPV = 9962.22. CPT IRR. IRR = 15.94%.
