An investment of $500 today is expected to bring the future cash flows for years 1 to 4 shown below. After the 4th year cash flows are expected to grow at the given long term growth rate forever.

Find the NPV and IRR of the investment.

Inputs
Discount rate	25.0%
Long Term growth rate	5.0%
Period
Cash Flows	(500.00)	200.00	210.00	240.00	260.00
Net Present Value
	*Formula: = NPV(B5, C9:F9)x(1+0.05)+B9	49.96
Internal Rate of Return
	*Formula =IRR(B9:F9)	27.52

required :

What would be the method to calculate the 5 - infinity cash flows using the long term growth rate?
My formulas for NPV and IRR are incorrect. I am simply showing what work I have performed so far. If IRR is NA, just answer NA.

The correct answers are NPV = 582.88 and IRR = NA

What are the formulas that will give me this output?

Answer rating: 100% (QA)

To calculate the net present value NPV and internal rate of return IRR correctly we need to adjust t... View the full answer