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Consider the following project: Kimberly-Clark is considering a new project. At the end of the first...

Consider the following project:

Kimberly-Clark is considering a new project. At the end of the first year of the project they could earn net operating cash flow of $1 million, $2 million the following year and, $3 million in the last year. If the project requires an initial investment (upfront cost) of $5 million, what is the project’s payback, NPV, and IRR. Based on this information, would you advise them to accept the project? Why? Show your work.

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Answer #1

Payback period is calculated in excel and screen shot provided below:

Payback period of project is 2.67 year.

IRR of project is calculated in excel and screen shot provided below:

IRR of project is 8.21%.

NPV cannot be calculated because discount rate is not given in question.

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