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Healthcare Clinic is evaluating a Capital Budgeting project that costs $52,125 and has expected net cash...

Healthcare Clinic is evaluating a Capital Budgeting project that costs $52,125 and has expected net cash flows of $12,000 per year for eight years. The first inflows occur one year after the cost outflow and the project has a cost of capital of 12 percent.

Below is a table of cash flows for the Capital Budget project:

Year Annual Cash Flow Cumulative Cash Flow
0 -$52,125 -$52,125
1 $12,000 -$40,125
2 $12,000 -$28,125
3 $12,000 -$16,125
4 $12,000 -$4,125
5 $12,000 $7,875
6 $12,000 $19,875
7 $12,000 $31,875
8 $12,000 $43,875

Please show your work for entering info in excel


What is the project's payback

What is the project's NPV

What is the IRR

Is the project financially acceptable? Explain your answer.

Solutions

Expert Solution

i have posted complete answer as well as picture for the excel formula..

Year Annual Cash Flow Cumulative Cash Flow
0 ($52,125) ($52,125)
1 $12,000 ($40,125)
2 $12,000 ($28,125)
3 $12,000 ($16,125)
4 $12,000 ($4,125)
5 $12,000 $7,875
6 $12,000 $19,875
7 $12,000 $31,875
8 $12,000 $43,875
Payback period =             5.34 year
NPV = $7,486.68
IRR = 16.00%
Project has positive NPV and also IRR is higher then required rate therefore project should be accepted

jeff jeffy answered 5 months ago
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