Question

A project has the following total (or net) cash flows.

__________________________________________

Year Total (or net) cash flow

_________________________________________

1 $20,000

2 30,000

3 50,000

4 60,000

_________________________________________

The required rate of return on the project is 15 percent. The
initial investment (or initial cost or initial outlay) of the
project is $80,000.

a) Find the net present value (NPV) of the project.

b) Find the profitability index (PI) of the project.

c) Calculate the modified internal rate of return (MIRR) of the
project.

Answer #1

Formulae

A firm is planning a new project that is projected to yield
cash flows of - $595,000 in Year 1, $586,000 per year in Years 2
through 5, and $578,000 in Years 6 through 11. This investment will
cost the company $2,580,000 today (initial outlay). We assume that
the firm's cost of capital is 11%.
1. Compute the projects payback period, net present value
(NPV), profitability index (PI), internal rate of return (IRR), and
modified internal rate of return (MIRR)....

A project has the following total (or net) cash flows.
________________________________________
Year Total (or net)
cash flow
________________________________________
1 $50,000
2 70,000
3 80,000
4 100,000
_______________________________________
The required rate of return on the project is 13 percent. The
initial investment (or initial cost or initial outlay) of the
project is $100,000.
a) Find the (regular) payback period of the project.
b) Compute the discounted payback period of the project.

A project has the following total (or net) cash flows.
________________________________________
Year Total (or net)
cash flow
________________________________________
1 $50,000
2 70,000
3 80,000
4 100,000
_______________________________________
The required rate of return on the project is 13 percent. The
initial investment (or initial cost or initial outlay) of the
project is $100,000.
a) Find the (regular) payback period of the project.
b) Compute the discounted payback period of the project.

2. A company is considering a project that has the following
cash flows: C0 = -3,000, C1 = +900, C2 = +500, C3 = +1,100, and C4
= +1,900, with a risk-adjusted discount rate of 8%. A) Calculate
the Net Present Value (NPV), Internal Rate of Return (IRR),
Modified Internal Rate of Return (MIRR), and Profitability Index
(PI) of this project. B) If you were the manager of the firm, will
you accept or reject the project based on the...

Capital Budgeting Analysis :
A firm is planning a new project that is projected to yield cash
flows of - $595,000 in Year 1, $586,000 per year in Years 2 through
5, and $578,000 in Years 6 through 11. This investment will cost
the company $2,580,000 today (initial outlay). We assume that the
firm's cost of capital is 11%.
(1) Draw a timeline to show the cash
flows of the project.
(2) Compute the project’s payback
period, net present value...

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...

You are considering building a shopping mall. The initial
investment is ?$1.43. million. The cash flows are?$410,000
for year? 1,200,000 for year?2, $200,000 for year? 3, and
?$170,000 for year 4. What are the net present value? (NPV) and
profitability index? (PI) of the project if the cost of capital is
12?%? Compute the internal rate of return? (IRR) for the
project.

1. A project has an initial outlay of $1,732. The project will
generate annual cash flows of $783 over the 4-year life of the
project and terminal cash flows of $258 in the last year of the
project. If the required rate of return on the project is 4%, what
is the net present value (NPV) of the project? Note: Enter your
answer rounded off to two decimal points. Do not enter $ or comma
in the answer box.
2.A...

Telesis Corp is considering a project that has the
following cash flows:
Year
Cash Flow
0
-$1,000
1
400
2
300
3
500
4
400
The company’s weighted average cost of capital (WACC) is
10%. What are the project’s payback period (Payback), internal rate
of return (IRR), net present value (NPV), and profitability index
(PI)?
A.
Payback = 3.5, IRR = 10.22%, NPV = $1260, PI=1.26
B.
Payback = 2.6, IRR = 21.22%, NPV = $349, PI=1.35
C.
Payback =...

Given the following cash flows, for the two independent
projects A and B, calculate
Payback
Period
Accounting rate of
return
Net Present
Value
Profitability
index
And recommend acceptance or rejection of projects considering
individual techniques of capital budgeting. A rate of 10 % has been
selected for the NPV analysis.
Project A
Project B
Initial outlay
$50,000
$100,000
Cash inflows
Year 1
$10,000
$ 25,000
Year 2
15,000
25,000
Year 3
20,000
25,000
Year 4
25,000
25,000...

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