Help with IRR

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Hi can any one help me with this one, the question is<BR><BR>If a project has a positive NPV at a discount rate of 8%, and the IRR has been determined as 12%, what return is the project actually giving?<BR><BR>I presume 12%!!!<BR><BR>Any help much appreciated<BR><BR>Cheers<BR>

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    Help with IRR

    The return is 12% You are right.<BR><BR>The positive NPV at a cost of capital of 8% would make the project worthy of investment.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Help with IRR

    To Sandy<BR><BR>Thank you for the reply, sometimes the obvious isn't so clear.<BR><BR>Cheers<BR><BR>have a good summer
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Help with IRR

    Hi I am deployed to Iraq also taking course on line before I was deployed, however I have to finish this course by the end of july 05. I don't have all the resource and time to finish all the assignment therefore I am seeking your help.<BR><BR>1. Consider a project with the expected cash flow:<BR> <BR> Years Cash Flow<BR><BR> o -51,000<BR><BR> 1 +51,000<BR><BR> 2 +96,000<BR><BR> 3 -96,000 <BR><BR><BR> What is this project's internal rate of return?<BR><BR> if the discount rate is 4%, what is this project'e net present <BR> value?<BR><BR>2. Consider the project with the following expected cash<BR> flow:<BR> <BR> Years: Cash Flow:<BR> 0 -700,000<BR><BR> 1 80,000<BR><BR> 2 180,000<BR><BR> 3 700,000 <BR><BR><BR> If the discount rate is 0%, what is the project's net <BR> present value?<BR><BR> If the discount rate is 5%, what is the project's net<BR> present value?<BR><BR> What is the project's internal rate of return?<BR><BR><BR><BR>3. A project requiring a $1.5 million investment has a <BR> profitability index 0f 0.96. what is its net present <BR> value?<BR><BR><BR> Thank you for your time<BR> HE <BR>

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