Calculate the irr

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Question - Joshua Jackson is making a brand new book which will cost him about $100 up front. Assume the book take about 1 year to make and Joshua pays the $100 today. At the start of the 2nd year, when the book is finally published, it will make Joshua $20 (where the $20 is made at the start of the 2nd year). Later, each year's earnings are supposed to be about 5% lower than the year prior, in perpetuity.

1. Calculate the NPV, if your required return is 15%.

2. Calculate the IRR.

3. Illustrate the NPV profile (graph). (Appropriately label your axis, show npv and irr, as well as npv when your discount rate = 0).

Reference no: EM133061647

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