Question

1. tapley dental is considering a project that has the following cash/WACC data. what is the npv?

wacc-8 percent

year 0: -1000

yr 1- 300

yr 2-300 yr 3-300 yr 4-300 yr 5-300

2. blanchford enterprises is considering a project that has the following cash flow data. what is the project’s irr?

year 0: -1099.67 year 1: 450 year 2: 450 year 3: 450

3. Reynolds bikes is considering a project with the following cash flow and wacc data.

wacc-10 percent

year 0: -100

year 1: 525

year 2: 485

year 3: 445

year 4:405

what is reynolds bikes’ discounted payback period?

Answer 1

Q1) Using financial calculator to calculate the Npv

Inputs: C0= -1,000

C1= 300 Frequency= 4

C2= 500. Frequency= 1

I= 8%

Npv= compute

We get, Npv of the project as $333.93

Q2) Usinf financial calculator to calculate the IRR

Inputs: C0= -1,099.67

C1= 450. Frequency= 3

IRR= compute

We get, IRR of the project as 11%

Q3)

Years	Cash flow	PV factor	PV of Cash flow ( Pv factor × Cash flow)	Cumulative discounted cashflow
0	-100		-100	-100
1	525	0.909	477.225	377.225
2	485	0.826	400.61	777.835
3	445	0.751	344.20	1,122.035
4	405	0.683	276.62	1,398.66

Discounted payback period= Full year before recovery + Cumulative Cash flow in the year before recovery / Discounted cash flow of the year after recovery

= 0 + 100 / 477.225

= 0 + 0.2095

= 0.21 years