4. Calculate the NPV at a cost of capital of 9% and the IRR for a project with an initial outlay of $25,424 followed by two zero cash flow years and then four years of inflows at $10,500. a. $3.239.70; 4% b. -$3,239.70; 6% c. $3,207.98; 9% d. $3,207.98; 12%

4. Calculate the NPV at a cost of capital of 9% and the IRR for a project with an initial outlay of $25,424 followed by two zero cash flow years and then four years of inflows at $10,500. a. $3.239.70; 4% b. -$3,239.70; 6% c. $3,207.98; 9% d. $3,207.98; 12%

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter9: Capital Budgeting Techniques

Section: Chapter Questions

Problem 9PROB

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

4. Calculate the NPV at a cost of capital of 9% and the IRR for a project with an initial outlay of
$25,424 followed by two zero cash flow years and then four years of inflows at $10,500.
a. $3,239.70; 4%
b. -$3,239.70; 6%
c. $3,207.98; 9%
d. $3,207.98; 12%

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Step 1: Definition of Cashflows

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Step 3: Calculation of IRR (Internal rate of return)

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