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Luft Watch Company is considering an investment of $22.000, which produces the following inflows: Year 1 2 3 Cash Flow $12,000 11,090 5.000 You are going to use the NPV profile to approximate the value for the IRR. Please follow these steps: a. Determine the NPV of the project based on a zero discount rate, NPV b. Determine the NPV of the project based on a 12 percent discount rate NPV c. Determine the NPV of the project based on a 23 percent discount rate it will be negative) (Negative answer should be indicated by a minus sign. Omit S sign in your response.) NPV d. Draw a NPV profile for the investment Observe the discount rate at which the NPV is zero This is an approximation of the IRR on the project d. Draw a NPV profile for the investment Observe the discount rate at which the NPV is zero. This is an approximation of the IRR on the project Net present value profile Net present value NY 3000 7500 7000- 6500 6000 5500- 5000- 4500- 4000 3500 3000- 2500 2000- 1500 1000 500 500 -1000 -1500 2000 10 15 Discount rate (96) 1 reset Instruction: 1. Use the line tool (NPV) to draw the Net Present Value 2. Once all points have been plotted, click on the line (not individual points) and a tool icon will pop up. You can use this to enter exact co-ordinates for your points as needed e. Compute the IRR IRR

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