Answered

Welcome to Westonci.ca, where you can find answers to all your questions from a community of experienced professionals. Our platform provides a seamless experience for finding reliable answers from a network of experienced professionals. Experience the convenience of finding accurate answers to your questions from knowledgeable experts on our platform.

. Los Angeles Lumber Company is considering a project with a cost
of $1,000 initially, and inflows of $300 at the end of years 1-5. LALC's cost of capital is 12 percent. What is the project's IRR and NPV?

Sagot :

Parrain

Based on the cost, the inflows, and the cost of capital, the project IRR is 15.24% and NPV is $81.44

The NPV is:

= Present value of inflows - initial cost

As the inflows are constant, we can find the present value as an annuity:

= (Inflow x Present value interest factor of annuity, 12%, 5 years) - 1,000

= (300 x 3.6048) - 1,000

= $81.44

The IRR can be calculated by Excel as shown in the attached file. List the cashflows and the years and then use the IRR function as shown:

= 15.24%

In conclusion, IRR is 15.24% and the NPV is $81.44

Find out more about these at https://brainly.com/question/25520566.

View image Parrain
View image Parrain
We appreciate your visit. Hopefully, the answers you found were beneficial. Don't hesitate to come back for more information. We hope our answers were useful. Return anytime for more information and answers to any other questions you have. We're glad you visited Westonci.ca. Return anytime for updated answers from our knowledgeable team.