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NPV - Accept/Reject Project

A project will generate $1200 in annual cash flows for 9 years but costs $9000 upfront to implement. Based on a net present value (NPV) of -$1,503.73 and an internal rate of return (IRR) of 3.81%, which is less than the 8% cost of capital, the document concludes that the project is not a good investment.

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lorrynorry
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122 views2 pages

NPV - Accept/Reject Project

A project will generate $1200 in annual cash flows for 9 years but costs $9000 upfront to implement. Based on a net present value (NPV) of -$1,503.73 and an internal rate of return (IRR) of 3.81%, which is less than the 8% cost of capital, the document concludes that the project is not a good investment.

Uploaded by

lorrynorry
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLS, PDF, TXT or read online on Scribd
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Sheet1

A project will have annual cash flows of $1200 for nine years. It costs $9000 to do. Is this a good

Year 0 1 2 3 4 5 6 7 8 9 NPV IRR

Cash Flow -9000 1200 1200 1200 1200 1200 1200 1200 1200 1200 -$1,503.73 3.81%

Since NPV is negative and IRR is less than cost of capital the project in not a good investment.

Page 1

Sheet1

ars. It costs $9000 to do. Is this a good project to do if the cost of money is 8%?

he project in not a good investment.

Page 2

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