Corporate Finance Q60
60Alpha 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% |
- 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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