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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Net Cash Flows and NPVs for different discount rate for projects S and L are given below

 

 

Net Cash Flows ($)

 

Discount Rate (%)

NPVS

NPVL

Year (t)

Project S

Project L

 

0%

$800

$1100

0

$(3000)

$(3000)

 

5

 

554.32

1

1500

400

 

10

161.33

 

2

1200

900

 

15

(90.74)

(259.24)

3

800

1300

 

20

(309.03)

(565.97)

4

300

1500

 

 

 

 

  1. e) What is the IRR for L? (Write down the equation for IRR and then Use an excel worksheet to calculate IRR 

Equation:

 

Answer:

 

 

  1. f) What is the cross-over rate? (Write down the equation for IRR and then Use an excel worksheet to calculate IRR 

Equation:

ANSMER:

 

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