Capital budgeting practice problems

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Capital Budgeting Practice Problems a. Consider the project with the following expected cash flows: Year Cash flow 0 -$400,000 1 $100,000 2 $120,000 3 $850,000 If the discount rate is 0%, what is the project's net present value? If the discount rate is 2%, what is the project's net present value? If the discount rate is 6%, what is the project's net present value? If the discount rate is 11%, what is the project's net present value? With a cost of capital of 5%, what is this project's modified internal rate of return? Now draw (for yourself) a chart where the discount rate is on the horizontal axis (the "x" axis) and the net present value on the vertical axis (the Y axis). 

Reference no: EM131060686

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