D. Net Present Value. The chart at the bottom of the page shows the net present values of three projects
(A, B and C) as a function of the interest rate. [9 Points]
D.1 Based on the information in the chart, what is the internal rate of return for Project A? ____ %
Project B? ____ % Project C? ____ %
D.2 If the cost of capital is 9%, which projects are profitable based on the net present value?
D.2 If the cost of capital is 9%, which projects are profitable based on the internal rate of return?
100,000
Net Present Value
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
-10,000
0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09 0.10 0.11 0.12 0.13 0.14 0.15 0.16 0.17 0.18
NPV$_A$
NPV$_C$
NPV$_B$
Interest Rate
