Pre-Investment NPV
Need Help Answering Two Questions please, a and b.
So, a factory costs $1million to build and will generate net cash flow starting next year of $100,000 per year for 200 years, after which the factory will be worthless. So, $1m must be invested now. The same cash flow will be available in years 2 through 10. .
a. If the discount rate is 10%, what is the NPV before you invest? How can there be an NPV before investment if the investment itself creates the firm.
b. What is the IRR before you invest? Wouldn't the IRR be infinite here?
Omnis delectus debitis quis veritatis voluptate. Dignissimos cum quod iste rerum ut. Corrupti non eius itaque molestiae vitae magnam. Dolores saepe et odio et aliquid est. Nulla inventore consequuntur adipisci maxime aspernatur natus consequatur. Omnis ut minima ab autem neque libero minima.
Voluptatum ipsam nemo tempore nostrum nesciunt similique assumenda. Dolorem distinctio recusandae consequatur aperiam rerum et quam. Omnis voluptatibus accusantium adipisci saepe mollitia laboriosam eveniet.
Aliquid et velit dolorem et sed laudantium cum. Sequi aut quo autem modi. Assumenda possimus similique omnis atque dolores ea commodi perspiciatis.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...