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Discount net cash flows

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Reference no: EM131473242

Consider this case:

Briton clothing company lost a portion of its financial data due to back up servers crashing. The CFO remembers the IRR of Project A is 11.3%, but he cant recall how much Briton originally invested in project A nor what the what was the NPV. However, he found a note that detailed annual net cash flows expected to be generated by Project A.

Year 1   2,400,00

Year 2  4,500,000

Year 3  4,500,000

Year 4  4,500,000

WACC is 7% which can be used to discount net cash flows.

Given the data, what is project A's initial investment and NPV?

Lastly, if the cash flows decrease and everything else is unchanged, will the projects IRR increase?

Reference no: EM131473242

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