Question

11-1 If Company XYZ plans to invest in a project with initial capital outlay $52,125, annual net cash inflow $12,000 for 8 years, and discount rate 12%, what is the Company XYZ’s NPA?

11-2 For the Company XYZ’s same project as in 11-1, what is the IRR for the project?

There are two projects: Project A and Project B

1. Project A: CF₀ = -6000; CF_1-5 = 2000; I/YR = 14.

Calculate NPV, IRR, MIRR, Payback period, and discounted payback period for Project A.

Project B: CF₀ = -18000; CF_1-5 = 5600; I/YR = 14.

Calculate NPV, IRR, MIRR, Payback period, and discounted payback period for Project B.

b. If the two projects are independent, which project(s) would be accepted?

c. If the two projects are mutually exclusive, which project would be accepted?

d. Is there conflict using both NPV and IRR approaches? If yes, why?

11-3 Calculate MIRR for the above project in 11-1.

11-4 Calculate the payback period of the above project.

11-5 Calculate the discounted payback period of the above project.

Answer 1

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