Reference no: EM132620744

Problem 1: Consider the XYZ Project, which requires an investment of $1.5 billion initially, with subsequent cash flows of $400 million, $500 million, $600 million, and $700 million. We can characterize the project with the following end-of-year cash flows. If the required rate of return of this project is 6%, please find out the IRR (Use NPV profile/graphic method and check using IRR function) and Modified IRR (Use formula to find it out).

Period         Cash Flow ($ millions)

0                  -$1,500

1                     $400

2                   $500

3                   $600

4                     $700