Description
Purpose of Assignment
The purpose of this assignment is to allow the student to calculate the project cash flow using net present value (NPV), internal rate of return (IRR), and the payback methods.
Assignment Steps
Resources: Corporate Finance
Create a 350-word memo to management including the following:
- Describe the use of internal rate of return (IRR), net present value (NPV), and the payback method in evaluating project cash flows.
- Describe the advantages and disadvantages of each method.
Explanation & Answer
Hi, Please check the attached file for details, let me know if you have any questions, thank you. James,
Attached.
The IRR of an investment is the discount rate at which the sum of present value of costs
(negative cash flows) equals to that of the profit (positive cash flows) of the investment. The
higher a project's IRR, the more desirable it is to undertake the project. When using IRR to
evaluate the project, one should accept projects ...
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