8.1

Net Present Value.  You have a project that has an initial cash outflow of −$20,000 and cash inflows of $6,000, $5,000, $4,000, and $3,000, respectively, for the next four years. Go to www.datadynamica.com and follow the "On-line IRR NPV Calculator" link. Enter the cash flows. If the required return is 12 percent, what is the IRR of the project? The NPV?

8.2

Internal Rate of Return.  Using the online calculator from the previous problem, find the IRR for a project with cash flows of −$500, $1,200, and −$400. What is going on here?