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NPV profile of a
project.
Given the following cash flow of Project L-2, draw the NPV profile.
Hint:
Be sure to use a discount rate of zero for one intercept
(y-axis)
and solve for the IRR for the other intercept
(x-axis).
Year 0 -$270,000 Year 1 $48,000 Year 2 $78,000 Year 3 $118,000 Year 4 $133,000
What is the NPV of Project L-2 where zero is the discount rate?
What is the IRR of Project L-2?
Which of the graphs below best fits the NPV profile of the project?
Answer & Explanation
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