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
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