An investment cost £10,000 with expected cash ﬂows of £3,000 for 5 years.The discount rate is 15.2382%.The NPV is ___ and the IRR is ___ for the project.
A)£0; 15.2382%
B)£3.33; 27.2242%
C)£5,000; 0%
D)Can not answer without one or the other value as input.
E)None of the above.

Question

Quizplus · Accepted Answer

The NPV is calculated as £0 because the discount rate given (15.2382%) is actually the IRR for the project, meaning it's the rate at which the present value of cash inflows equals the initial investment, resulting in an NPV of £0. The IRR is 15.2382% as it is explicitly stated in the question.

An Investment Cost £10,000 with Expected Cash ﬂOws of £3,000