Question

A project has the following cash flows. What is the payback period, NPV, PI, IRR, MIRR, and EAA? Assume an interest rate of 5%.

Year CF ($)

0) -5,000

1). 2,700

2). 3,300

3) 1,400

4). 330

5) 340

Also upload your excel files showing your work.

Answer 1

The parameters can be found as shown below;

Year	0	1	2	3	4	5
Cashflows CF	-5000	2700	3300	1400	330	340
Discounted cashflow= CF/(1+5%)^n	-5,000.00	2,571.43	2,993.20	1,209.37	271.49	266.40
Payback period (total years for initial cashflow to return)	1.696969697
NPV @ 5% =sum of discounted cashflows)	2,311.89
PI= PV of cashoutflow/PV of inflow	1.46237784
IRR =irr(all cashflows)	28%
MIRR =mirr(cashflows,financing rate, reinvestment rate)	13%
EAA= r*NPV/(1-(1+r)^-n	533.9881416