Corporate Finance Q60

0. Alpha Corporation is considering investing €500 million with expected aftertax cash inflows of €110 million per year for six consecutive years. The required rate of return is 8 percent. The project’s NPV and IRR are closest to:
NPV IRR
A   €7 million 8.6%
B   €9 million 8.6%
C   €11 million 5.9%

Answer
Comment
Array

Option : B
Explanation : Enter the following values in a financial calculator to determine NPV and IRR. CF0 = -500, C01 = 110, F01 = 6, I = 8, CPT NPV. NPV = 8.52 million euro. CPT IRR. IRR = 8.56 per cent.

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