Present Value of Annuity of $1 Periods | 1% 2% 396 4% 5% 6% 8% 1096 | 12% | 1496

ID: 2491040 • Letter: P

Question

Present Value of Annuity of $1 Periods | 1% 2% 396 4% 5% 6% 8% 1096 | 12% | 1496 | 1696 | 1896 | 2096 0.990 0.980 0.971 0.9620.9520.9430.9260.909 0.893 0.8770.862 0.847 0.833 2 1.970 1.942 1.913 1.886 1.859 1.833 1.783 1.7361.6901.6471.605 1.5661.528 3 2.9412.884 2.829 2.775 2.723 2.673 2.5772.4872.4022.3222.246 2.174 2.106 43.902 3.808 3.717 3.630 3.546 3.465 3.3123.1703.0372.9142.798 2.690 2.589 5 4.853 4.713 4.580 4.452 4.329 4.2123.9933.7913.6053.4333.2743.1272.991 6 5.7955.601 5.417 5.2425.076 4.9174.6234.3554.1113.8893.685| 3.498|3.326 7 6.7286.472 6.230 6.002 5.7865.5825.2064.8684.5644.2884.0393.812 3.605 87.6527.3257.020 6.733 6.463 6.210 |5.7475.3354.9684.6394.3444.078| 3.837 9 8.566 8.162 7.7867.435 7.1086.802 6.2475.7595.3284.9464.6074.303 4.031 10 9.4718.983 8.530 8.111 7.7227.360 6.7106.1455.6505.2164.8334.4944.192 11 10.368 9.7879.2538.7608.3067.8877.1396.4955.9385.453 5.029 4.656 4.327 12 11.255 10.575 9.9549.3858.863 8.3847.5366.8146.1945.660 5.1974.793 4.439 13 12.134 11.348 10.635 9.9869.3948.8537.9047.1036.4245.842 5.342 4.910 4.533 14 13.004 12.106 11.296| 10.563 9.8999.2958.2447.3676.628 6.002 5.4685.0084.611 15 13.865 12.849 11.938 11.118 10.380 9.7128.5597.6066.8116.142 5.575 5.092 4.675 20 18.046 16.351 14.877 13.590 12.462 11.4709.8188.5147.4696.623 5.929 5.353 4.870 25 22.023 19.523 17.413 15.622 14.094 12.783 10.6759.0777.8436.873 6.0975.4674.948 30 25.808 22.396 19.600 17.292 15.372 13.765 11.2589.4278.0557.003 6.1775.5174.979 40 32.835 27.355 23.115 19.793 17.159 15.046 11.925 9.7798.2447.105 6.233 5.548 4.997

Explanation / Answer

Approximate IRR = 13.86%

( since we know if WACC >IRR the project has a negative value so we see at 14% our NPV is negative hence IRR is lower

Outflow - 47,000

16,000 * .893 14,288

19,000*.797 15,143

27,000*.712 19,224

NPV 1,655

So now wee see WACC<IRR so NPV is positive

Hence the NPV is positive .Therefore IRR must be greater than 12%