Problem:
Consider the project with the following expected cash flows:
Year Cash flow
0 - $500,000
1 $100,000
2 $110,000
3 $550,000
- If the discount rate is 0%, what is the project's net present value?
- If the discount rate is 4%, what is the project's net present value?
- If the discount rate is 8%, what is the project's net present value?
- If the discount rate is 10%, what is the project's net present value?
- What is this project's internal rate of return?