I will invest $500,000 in a property and anticipate the following cash flows (assume they occur at the end of each period to make things simple):

Cash Flow year 1: $90,000

Cash Flow year 2: $95,000

Cash Flow year 3: $100,000

Cash Flow year 4: $105,000

Cash Flow year 5: $110,000 + Net Sales proceeds of $650,000

If my cost of capital is 12%, what is the IRR and the NPV of this investment?Should I pursue this investment?

Answer rating: 100% (QA)

To calculate the Internal Rate of Return IRR and Net Present Value NPV of the investment we need to discount the cash flows to their present values an... View the full answer