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NPV and Other Investment Rules

NPV and Other Investment Rules. Q1. Vital Silence, Inc., has a project with the following cash flows: The required return is 13 percent. What is the IRR for this project?. Q2.

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NPV and Other Investment Rules

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  1. NPV and Other Investment Rules

  2. Q1 • Vital Silence, Inc., has a project with the following cash flows: • The required return is 13 percent. What is the IRR for this project?

  3. Q2 • Suppose the following two independent investment opportunities are available to Relax, Inc. The appropriate discount rate is 9 percent. • Compute the NPV and IRR for each of the two projects

  4. Q3) • The Yurdone Corporation wants to set up a private cemetery business. According to the CFO, Barry M. Deep, business is "looking up". As a result, the cemetery project will provide a net cash inflow of $106,000 for the firm during the first year, and the cash flows are projected to grow at a rate of 4 percent per year forever. The project requires an initial investment of $1,590,000. • What is the NPV for the project if the required return is 10 percent? • The company is somewhat unsure about the assumption of a growth rate of 4 percent in its cash flows. At what constant growth rate would the company just break even if it still required a return of 10 percent on investment?

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