Unformatted text preview: a. 0 = 3 2 1 ) IRR 1 ( 000 , 510 $ ) IRR 1 ( 000 , 780 $ ) IRR 1 ( 000 , 510 $ + + + + + $4,000,000 IRR = 31.55%. Alternatively, with a financial calculator, input the following: CF = 4000000, CF 1 = 510000, CF 2 = 780000, CF 3 = 510000, and solve for IRR = 31.55%. b. NPV = 3 2 1 ) 15 . 1 ( 000 , 510 $ ) 15 . 1 ( 000 , 780 $ ) 15 . 1 ( 000 , 510 $ + + $4,000,000. With a financial calculator, input the following: CF = 4000000, CF 1 = 510000, CF 2 = 780000, CF 3 = 510000, and I = 15 to solve for NPV = $2,631,396.40. The results of this run are very bad because the project’s life is so short. Had the life turned out (by chance) to be 13 years, the longest possible life, the IRR would have been about 25%, and the NPV would have been about $1 million. Answers and Solutions: 12  11...
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 Spring '08
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 Randomness, Hardware random number generator, random number, $1 million, Statistical randomness

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