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Solution Library
Calculation Of Present Value And Internal Rate Of Return Of A Project
Question
Your company is planning to install a new facility in its Edmonton plant for manufacturing air cleaning equipment for coal fired power stations. The project life is 8 years. MARR (the minimum attractive rate of return) is i%. The anticipated after tax' cash flows of the project (in millions of dollars) are given below:
|
End of year |
0 |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
|
Cashflow |
-6.5 |
2.0 |
2.0 |
2.0 |
X+2.0 |
2.0 |
2.0 |
2.0 |
Y+2.0 |
Determine:
- the value of Y if the present value of the project is $4,600,000, X = 0 and I = 12% (monthly compounding)
- the present value of the Project if Y = X, the equivalent uniform annual value of the project is 1.5X and I = 10% (yearly compounding)
- the value of Y if X = 0, i = 10% (yearly compounding) and the external rate of return of the Project is 20%
- the internal rate of return if X = -3.0 and Y =1.0
- the minimum value of X that would make the project (economically) acceptable if i = 10 % (yearly compounding) and Y = 4X
Summary
The question belongs to Finance and it discusses about calculation of present value and internal rate of return for a project.
Total Word Count NA
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