NPV and IRR Benson Designs has prepared the following estimates for a long-term project it is...

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Finance

NPV and IRR Benson Designs has prepared the following estimatesfor a long-term project it is considering. The initial investmentis
$27 comma 69027,690 ,
and the project is expected to yield after-tax cash inflowsof
$6 comma 0006,000
per year for
77
years. The firm has a cost of capital of
1212 %.
a. Determine the net present value (NPV) for the project.
b. Determine the internal rate of return (IRR) for theproject.
c. Would you recommend that the firm accept or reject theproject?

Answer & Explanation Solved by verified expert

3.7 Ratings (377 Votes)

aNet present value is solved using a financial calculator The steps to solve on the financial calculator Press the CF button CF0 27690 It is entered with a negative sign since it is a cash outflow Cash flow for all See Answer

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Transcribed Image Text

NPV and IRR Benson Designs has prepared the following estimatesfor a long-term project it is considering. The initial investmentis$27 comma 69027,690 ,and the project is expected to yield after-tax cash inflowsof$6 comma 0006,000per year for77years. The firm has a cost of capital of1212 %.a. Determine the net present value (NPV) for the project.b. Determine the internal rate of return (IRR) for theproject.c. Would you recommend that the firm accept or reject theproject?