You are proposing a cost savings project that will require an initial investment of $$250,000$ this year

and will deliver benefits of $$100,000$ next year $($year $2),$ $$100,000$ in year $3,$ require an additional

investment, net of benefits, of $$40,000$ in year $4,$ and deliver additional benefits of $$120,000$ in

years $5$ and $6$

a$.$ Calculate the net present value $($NPV$)$ of this project using a weighted average cost of

capital ${?}^1$ of $13\%($discount rate $-$ like an interest rate$)$

b$.$ Find the discount rate that results in a NPV of zero. This is also known as the Internal Rate of

Return or IRR and there is an Excel formula for that.

Show the excel formulas