A project has annual cash flows of $3,000 for the next 10 years and then $8,500 each year for the...

Question

A project has annual cash flows of $3,000 for the next 10 years and then $8,500 each year for the following 10 years. The IRR of this 20-year project is 13.12%. If the firm's WACC is 12%, what is the project's NPV?

Robert · Accepted Answer

Question: 
A project has annual cash flows of $3,000 for the next 10 years and then $8,500 each year for the 
following 10 years. The IRR of this 20-year project is 13.12%. If the firm's WACC is 12%, what is the 
project's NPV? 
Solution: 
IRR is the rate at which the net present value of the cash flow is equal to the initial return. This 
can be calculated by the given formula: 
0 = investment + CF1/ (1+IRR) 
We do not have initial investment so in order to find the initial investment the formula is as 
follows = 
Initial investment = ?

A project has annual cash flows of $3,000 for the next 10 years and then $8,500 each year for the following 10 years. The IRR of this 20-year project is 13.12%. If the firm's WACC is 12%, what is the...

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