Question

# 1. Project K costs \$45,000, its expected cash inflows are \$15,000 per year for 9 years,...

1. Project K costs \$45,000, its expected cash inflows are \$15,000 per year for 9 years, and its WACC is 11%. What is the project's NPV? Round your answer to the nearest cent. 2. Project K costs \$59,542.90, its expected cash inflows are \$12,000 per year for 10 years, and its WACC is 14%. What is the project's IRR? Round your answer to two decimal places. 3. Project K costs \$75,000, its expected cash inflows are \$15,000 per year for 11 years, and its WACC is 11%. What is the project's payback? Round your answer to two decimal places. 4. Project K costs \$35,000, its expected cash inflows are \$10,000 per year for 8 years, and its WACC is 9%. What is the project's discounted payback? Round your answer to two decimal places.

1) CF0=(45000)

CF1= 15000

CF2= 15000

CF3= 15000

CF4= 15000

CF5= 15000

CF6= 15000

CF7= 15000

CF8= 15000

CF9= 15000

I=11%

NPV=\$38805.71

2) No. of years =10

cf0= \$59542.90

npv=0

cf=12000

npv=cf0+(cf1/(1+irr))+(cf2/(1+irr)2)+.....(cfn/(1+irr)n)

=15.30%

3) project payback period= initial investment / cash inflow

=75000/15000=5 years

4)

 year 0 -35000 -35000 1 -35000 -35000 1 10000 -25000 .92 9174.31 -25825.69 2 10000 -15000 .84 8416.8 -17408.89 3 10000 -5000 .77 7721.83 -9687.05 4 10000 5000 .71 7084.25 -2602.8 5 10000 15000 .65 6499.31 3896.51 6 10000 25000 .6 5962.67 9859.19 7 10000 35000 .55 5470.34 15329.53 8 10000 45000 .5 5018.66 20348.19

discounted payback period=X+(Y/Z)

= 4+ (-2602.8/6499.31) = 4.4 years approx

X=the last time cummulative dcf was negative

Y=the absolute value of ccf at the end of period x

z= value of dcf in the period after X

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