# Read the information regarding a possible new investment available from McGraw-Hills Connect or your course instructor. a. Complete the spreadsheet

## Question:

a. Complete the spreadsheet to estimate the project’s annual after tax cash flows.

b. What is the investment’s net present value at a discount rate of 10 percent?

c. What is the investment’s internal rate of return?

d. How does the internal rate of return change if the discount rate equals 20 percent?

e. How does the internal rate of return change if the growth rate in EBIT is 8 percent instead of 3 percent?

Net Present Value

What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at... Internal Rate of Return

Internal Rate of Return of IRR is a capital budgeting tool that is used to assess the viability of an investment opportunity. IRR is the true rate of return that a project is capable of generating. It is a metric that tells you about the investment... Discount Rate

Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...

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