单选题 A company is considering the purchase of a copier that costs $ 5000. Assume a cost of capital of 10 percent and the following cash flow schedule: Year 1: $ 3000 Year 2: $ 2000 Year 3: $ 2000 Determine the projects NPV and IRR. NPV IRR ①A. $883 20% ②B. $243 20% ③C. $243 15% A．① B．② C．③
【正确答案】 A
【答案解析】
To determine the NPV, enter the following:
PV of $ 3000 in year 1=$ 2727, PV of $ 2000 in year 2=$1653, PV of $ 2000 in year 3=$1503. NPV=($2727+$1653+$1503)-$5000=883.
You know the NPV is positive, so the IRR must be greater than 10%. You only have two choices, 15% and 20%. Pick one and solve the NPV. If it is not close to zero, then you guessed wrong; select the other one. [3000/(1+0.2)1+2000/(1+0.2)2+2000/(1+0.2)3]-5000=46. This result is closer to zero (approximation) than the $ 436 result at 15%.
Therefore, the approximate IRR is 20%.