Question
In: Finance
Net Present Value and Discounted Payback Period Using the amount of capital expenditures incurred in 2018...
Net Present Value and Discounted Payback Period
Using the amount of capital expenditures incurred in 2018 -1976.4 (which will consider to be an initial investment outflow), assume the company will generate operating cash inflows of $205 million the first year, $385 million the second year, $478 million the third year, $599 million the fourth year, $625 million the fifth year, and $100 million the year six.
a.) What is the NPV using the company’s WACC of 3.56 and what is the IRR?
b.) Did the company make a good investment decision using the NPV criteria?
c.) If the company had a discounted payback period policy of four years, did it make a sound investment decision (use the company’s calculated WACC)?
Solutions
Expert Solution
Please refer to below spreadsheet for calculation and answer. Cell reference also provided.
Cell reference -
Hope this will help, please do comment if you need any further explanation. Your feedback would be appreciated.
jeff jeffy answered 6 months agoRelated Solutions
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Net Income
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0
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1
5,000
6,000
3,000
4,000
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Net Income
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Net Income
Cash Flow
0
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1
5,000
6,000
3,000
4,000
2
5,000
6,000
5,000
6,000
3
5000
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7,000
8,000
4
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can you please let me know how you find this? especially if
using a financial calculator. Thanks!
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