Problem 10.42

An investment of $83 generates after-tax cash flows of $49 in Year 1, $67 in Year 2, and $131 in Year 3. The required rate of return is 20 percent. The net present value is closest to

1.       $49.81.

2.       $62.18.

3.       $80.17.

4.       $41.62

Problem 10.40

Given the following cash flows for a capital project, calculate the NPV and IRR. The required rate of return is 8 percent.

1.       NPV=3508. IRR=11.59%

2.       NPV=4511. IRR=11.59%

3.       NPV=3508. IRR=13.13%

4.       NPV=4511. IRR=13.13%