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Your company also needs you to analyze the impact of a new project that will cause your cash flows to increase $5,500 over last year’s, and continue to grow at a constant rate of 10% per year for the foreseeable future. The discount rate is 20%. You need to analyze this in three ways. First, calculate the NPV and IRR of this new project based on an initial investment cost of $42,000 and the change in cash flows each year, assuming the growth continues forever. Second, find the NPV of this project if the project only generates cash flows for 20 years. Third, use an embedded function in Excel to calculate the NPV of the project if the cash flows had zero growth, and the project only generates cash flows for 40 years.

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92410963

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