Question

You will be evaluating three projects for Hasbro Toys. Hasbro's cost of capital or discount rate is 10%.

The first project (A) will cost $25,000 initially. The project will then return cash flows of $8,000 for 4 years.

The second project (B) will cost $40,000 initially. The project will then return cash flows of $15,000 for the next 2 years and $10,000 for 2 years after that.

The third project (C) will cost $30,000 initially. The project will then return cash flows of $12,000 for 3 years

What is Projects A's NPV, IRR, Payback Period, and PI? Show step by step and circle final answer.

Can somebody answer these for me?

Answer 1

A:
NPV=-25000+8000/10%*(1-1/1.1^4)=358.9235708

PI=1+358.9235708/25000=1.014356943

Payback=25000/8000=3.125

IRR=IRR({-25000;8000;8000;8000;8000})=10.6615257%

B:
NPV=-40000+15000/1.1+15000/1.1^2+10000/1.1^3+10000/1.1^4=376.3404139

PI=1+376.3404139/40000=1.00940851

Payback=3

IRR=IRR({-40000;15000;15000;10000;10000})=10.4726316%

C:
NPV=-30000+12000/10%*(1-1/1.1^3)=-157.7761082

PI=1-157.7761082/30000=0.994740796

Payback=30000/12000=2.5

IRR=IRR({-30000;12000;12000;12000})=9.7010257%