What is the relationship between the npv and the irr

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Question - Vole Provisioning SA, an airline caterer, is purchasing refrigerated trucks at a total cost of €3.25 million. After-tax net income from this investment is expected to be €750 000 for the next five years. Annual depreciation expense was €650 000. The cost of capital is 17 per cent.

Required -

1. What is the NPV on this investment?

2. What is the relationship between the NPV and the IRR? Based on the NPV, at what level would you expect the IRR to be relative to the cost of capital?

Reference no: EM133126101

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