11 . TI Calculator Graded Problem Set

You are evaluating a proposed project for your company. The project is expected to generate the following end-of-year cash flows:

-3,000 300 300 600 600 800 800 800 400

You have been told you should evaluate this project with an interest rate of 9%. What is the project's NPV?

$169.58

$235.97

$101.62

$119.39

$51.43

Your group leader has now told you that the risk of the project was understated before. As a result, she tells you to recalculate the projects NPV with an 11% interest rate. What is the new NPV?

-$71.99

-$147.53

-$115.38

-$190.92

-$22.97

When the project was first evaluated at 9%, you would have advised that the company _______ the project because it ______________ value for the company. But now with an 11% interest rate, you will advise the company to __________ the project because it _____________ value for the company.

Calculate the projects internal rate of return (IRR).

10.81%

9.79%

9.41%

9.99%

13.38%