Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Growth Enterprises believes its latest project, which will cost $82,000 to install, will generate a perpetual growing stream of cash
flows. Cash flow at the end of the first year will be $7,000, and cash flows in future years are expected to grow indefinitely at an annual
rate of 5%.
a. If the discount rate for this project is 10%, what is the project NPV?
Note: Do not round intermediate calculations.
NPV
b. What is the project IRR?
Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.
IRR
%
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Transcribed Image Text:Growth Enterprises believes its latest project, which will cost $82,000 to install, will generate a perpetual growing stream of cash flows. Cash flow at the end of the first year will be $7,000, and cash flows in future years are expected to grow indefinitely at an annual rate of 5%. a. If the discount rate for this project is 10%, what is the project NPV? Note: Do not round intermediate calculations. NPV b. What is the project IRR? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. IRR %
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