an office building

Finance Oct 06, 2020

an office building. Your analysts forecast that it will cost you $1,000,000 immediately (time 0), and it will cost you $5,000 in one year (time 1). They forecast you can sell the building for $2,400,000 in two years (time 2). If your discount rate is i= 25%, what is the net present value of this investment? What is the IRR of the project in question 11? (if you are using an ordinary calculator, it is a quadratic equation; if you are using a financial calculator, use the CF method).

Expert Solution

11. NPV = 532,000

USING FINANCIAL CALCULATOR PUT

CF0 = -1,000,000

C01 = - 5,000

C02 = 2,400,000

THEN PRESS NPV

I = 25%

THEN PRESS CPT , NPV = 532,000

12.IRR = 54.67%

USING FINANCIAL CALCULATOR PUT

CF0 = -1,000,000

C01 = - 5,000

C02 = 2,400,000

THEN PRESS IRR

THEN PRESS CPT , IRR = 54.67%

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