Please describe NPV, IRR and their relationship. How do you evaluate each for making an investment decision? That is, what is a favorable NPV and IRR for making an investment decision. If you were developing a capital budgeting process at your employer, how would you prioritize your projects?
How do you evaluate each for making an investment decision? That is, what is a favorable NPV and IRR for making an investment decision.
If you were developing a capital budgeting process at your employer, how would you prioritize your projects?
What is the NPV when IRR = WACC, IRR>WACC, and IRR<WACC?
There is a duplex for sale in Absecon for $700,000 at this time. It has 2 units that generate a total of $25,000 in gross rent. The property taxes are $4,000, commercial property insurance is $2,000, flood insurance is $1,000, and annual maintenance is $2,000. You expect to sell it in one year at a price growth of 0%. What is the NPV with a WACC of 10%.
Is the IRR greater or less than the WACC? Would you invest in this project and why?
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