You have the following set of CFs for an investment: 6. Today -20 1 4 years -25 2 years year 42C years a. Compute the NPV for discount rates of 5%, 10%, 90% and 95%. Estimate IRR for this investment. 1 1 b.- The benchmark rate of return for IRR for your firm is 20%. Without any more calculations, do you have enough information to determine if this is a good investment? If so, determine if the investment is good or bad and explain your answer. If there is not enough information to determine if this is a good investment, explain why not and state the information that you would need in order to determine if this is a good investment.' 1

You have the following set of CFs for an investment: 6. Today -20 1 4 years -25 2 years year 42C years a. Compute the NPV for discount rates of 5%, 10%, 90% and 95%. Estimate IRR for this investment. 1 1 b.- The benchmark rate of return for IRR for your firm is 20%. Without any more calculations, do you have enough information to determine if this is a good investment? If so, determine if the investment is good or bad and explain your answer. If there is not enough information to determine if this is a good investment, explain why not and state the information that you would need in order to determine if this is a good investment.' 1

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

I need help woring this problem and how to set up on excel too.

You have the following set of CFs for an investment:
6.
Today
-20
1
4 years
-25
2 years
year
42C
years
a. Compute the NPV for discount rates of 5%, 10%, 90% and 95%. Estimate IRR for
this investment.
1
1
b.- The benchmark rate of return for IRR for your firm is 20%. Without any more
calculations, do you have enough information to determine if this is a good
investment? If so, determine if the investment is good or bad and explain your
answer. If there is not enough information to determine if this is a good investment,
explain why not and state the information that you would need in order to determine
if this is a good investment.'
1

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