5 - Wiley

Expected Cash flow in year 4 = [0.8 (15 * 0.6 + 2 * 0.4)] – 5.5 = 7.84 – 5.5 = 2.34. The net present value (NPV) of this proposed project is the sum of the discounted cash flows in the last column that sum to $3.65M. Alternatively, the IRR for this project can be found; that is, the discount rate that results in an NPV value equal to zero. ................
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