Question

Please show all steps to solve and explain. Thanks! Do not use excel. Kobe Beef has 10\% cost of capital, and has generated the following information on twin oroiects:

A) Compute the internal rate of return (IRR) for project A
B) Compute the net present value (NPV) for project B

Answer 1

To compute the IRR for project A, compare the NPV at different discount rates. For project B, compute the NPV using the cash flows and discount rate.

Step-by-step explanation:

To compute the internal rate of return (IRR) for project A, we need to find the discount rate that makes the net present value (NPV) of the project zero. Since we do not have the cash flows for project A, we cannot directly calculate the IRR. However, we can compare the NPV of project A at different discount rates and find the rate that gives an NPV closest to zero. Assuming we have the cash flows for project A, we can use the following formula to calculate the NPV:

NPV = CF1/(1+r)^1 + CF2/(1+r)^2 + ... + CFn/(1+r)^n

Where CF represents the cash flow for each period and r is the discount rate.

To compute the net present value (NPV) for project B, we use the following formula:

NPV = CF0 + CF1/(1+r)^1 + CF2/(1+r)^2 + ... + CFn/(1+r)^n

Where CF0 is the initial cash outflow for the project.