Question

6B4

A project has an initial outlay of $3,480. It has a single payoff at the end of year 3 of $9,922. What is the net present value (NPV) of the project if the company’s cost of capital is 11.97 percent?

6C4

Find the modified internal rate of return (MIRR) for the following series of future cash flows if the company is able to reinvest cash flows received from the project at an annual rate of 11.59 percent.The initial outlay is $420,300.

Year 1: $139,400

Year 2: $137,100

Year 3: $197,400

Year 4: $120,700

Year 5: $159,000

*Round the answer to two decimal places in percentage
form.* *(Write the percentage sign in the
"units" box)*

*6D1*

Find the profitability index (PI) for the following series of future cash flows, assuming the company’s cost of capital is 14.37 percent. The initial outlay is $457,779.

Year 1: $190,001

Year 2: $169,936

Year 3: $175,905

Year 4: $173,594

Year 5: $178,373

*Round the answer to two decimal places*

Answer #1

**3587.96**

6C4. FV of Cash Inflows
=139400*(1+11.59%)^4+137100*(1+11.59%)^3+197400*(1+11.59%)^2+120700*(1+11.59%)^1+159000
=946160.4196

PV of Cash outflows =420300

MIRR =(FV of cash inflows/PV of cash outflows)^(1/n)-1
=(946160.4196/420300)^(1/5)-1 =**17.62%**

6D1. PV of Cash flows
=190001/(1+14.37%)+169936/(1+14.37%)^2+175905/(1+14.37%)^3+173594/(1+14.37%)^4+178373/(1+14.37%)^5

=606236.6420

Initial Outlay =457779

PI =(PV of Cash flows /Initial Outlay)=(606236.6420/457779)
=**1.32**

6c1
A project has an initial outlay of $2,154. It has a single cash
flow at the end of year 8 of $4,834. What is the internal rate of
return (IRR) for the project?
Round the answer to two decimal places in percentage
form. (Write the percentage sign in the
"units" box)
6b1
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Round answer to two decimal places.

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