Question

Year Cost	Project 1	Project 2	Project 2
	($1 Mil)	($1.5 Mil)	($2 Mil)
1	$300,000	$900,000	$300,000
2	$300,000	$500,000	$400,000
3	$300,000	$200,000	$600,000
4	$300,000	$200,000	$600,000
5	$300,000	$0	$1,000,000

Cost of Capital is 8%. Acceptable payback period is 3 1/2 years. Acceptable discounted payback period is 4 1/2 years. Based on the above data, calculate payback, discounted payback, net present value, internal rate of return and modified rate of return.

Based on the above data, calculate payback, discounted payback, net present value, internal rate of return and modified rate of return for each project.

Answer 1

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -