Tuttle Enterprises is considering a project that has the following cash flow and WACC data. The initial Outlay is $1,000. Cash flows: Yr 1=$400, YR 2=$500, and Yr 3=$550. WACC is 6.5% Year 0 1 2 3 Cash Flows -1,000 400 500 550 What is the NPV and the IRR?
Tuttle Enterprises is considering a project that has the following cash flow and WACC data. The initial Outlay is $1,000. Cash flows: Yr 1=$400, YR 2=$500, and Yr 3=$550. WACC is 6.5%
| Year | 0 | 1 | 2 | 3 |
| Cash Flows | -1,000 | 400 | 500 | 550 |
What is the NPV and the IRR?
The net present value of a project is the present value of all the cash flows of that project discounted at a required rate of return. The net present value is compared to the initial investment and is called the return that is to be generated from the project or investment to be done. It is a measure of determining the returns from alternative projects and investments so that the profitable project or investment is taken into consideration.
The internal rate of return (IRR) is the measure of the profitability of a project and is used in financial analysis. The IRR tells us about the profitability of the projects that are expected to be taken. The internal rate of return is basically a discount rate at which the net present value of the project's cash flows becomes zero.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
