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    8,9,10,11

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    Thanh Lê

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    8,9,10,11

    Uploaded by

    Thanh Lê
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    4 views2 pages

    8,9,10,11

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    Thanh Lê

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    © All Rights Reserved
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    8.

    Using an interest rate of 12% per year the net present value (NPV) of a project
    has been correctly calculated as $60. If the interest rate is increased by 6% the
    NPV of the project falls by $80. What is the internal rate of return (IRR) of the
    project?
    Giải
    At r1 = 12% interest rate, NPV1 = $60.
    At r2 = 18% interest rate (12% + 6%), NPV2 = $60 - $80 = -$20.
    IRR = r1+{[NPV1 / (NPV1 – NPV2)] * (r1 -r2)}
    IRR = 12% + {60 / [60 - (-20)]} * (18% - 12%) = 16.5%
    9. Project A has the following cash flows.
    Year Cash flow
    $
    0 -800,000
    1 250,000
    2 350,000
    3 370,000
    4 100,000
    5 50,000
    The company's cost of capital is 12%.
    What is the discounted payback period of Project A?
    Giải
    Time Cash flow Discount( 12 PV Cumulative
    %)
    0 -800,000 1 -800,000
    1 250,000 0.893 223,250 (576,750)
    2 350,000 0.797 278,950 (297,800)
    3 370,000 0.712 263,440 (34,360)
    4 100,000 0.636 63,600 29,240
    5 50,000 0.567 28,350 57,590
    Discounted payback = 34,360/63,600*12 = 6,5 months => Payback in
    3,65 years

    10. If the interest rate is 6.5%, what would you pay for a perpetuity of $1,300
    starting in one year's time? (to the nearest $)
    Giải
    PV = a/r = 1,300/6.5% = $20,000
    11. An investor is to receive an annuity of $16,000 for six years commencing at
    the end of year 1. It has a present value of $69.680. What is the rate of interest
    (to the nearest whole percent)?
    0Giải
    Time Cash flow Discount PV
    1-6 = 69,680/16,000 $69.680
    $16,000
    = 4,355

    To Annuitytable => r = 10%

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