Question: For C, how would you go about finding the two IRR's within excel? For reference, the answers are 0.00 and 7.06 Please setup an excel

 For C, how would you go about finding the two IRR's

For C, how would you go about finding the two IRR's within excel? For reference, the answers are 0.00 and 7.06

Please setup an excel spreadsheet to solve this and explain the process.

You are considering constructing a new plant in a remote wilderness area to process the ore from a planned mining operation. You anticipate that the plant will take a year to build and cost $100 million upfront Once built, it will generate cash flows of $15 million at the end of every year over the life of the plant. The plant wil be useless 20 years after its completion once the mine runs out of ore. At that point you expect to pay $200 million to shut the plant down and restore the area to its pristine state. Using a cost of capital of 12% a. What is the NPV of the project? b. Is using the IRR rule reliable for this project? Explain c. What are the IRRs of this project? a. What is the NPV of the project? The NPV of the project is S-18.66 million (Round to one decimal place.) b. Is using the IRR rule reliable for this project? Explain Select the best choice below) No, the RR rule is not reliable, because the project has a negative cash flow that comes after the positive ones. B. Yes, the IRR rule is reliable, because the project has a negative net present value. C. Yes, the IRR rule is reliable, because the project has a negative cash flow that comes after the positive ones. D. No, the IRR rule is not reliable, because the project has a negative net present value. c. What are the IRRs of this project? The RRs of this project in ASCENDING order are % and % (Round to two decimal places )

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!