Question
In: Finance
Project 1 Initial $ 130,000.00 Investment Cost of Capital 7% Target Payback 4 years Period Cash...
| Project 1 | ||
| Initial | $ 130,000.00 | |
| Investment | ||
| Cost of Capital | 7% | |
| Target Payback | 4 years | |
| Period |
| Cash Flow | |||||
| Project 1 | Cum. CF | Discounted CF | Cum. CF | ||
| Initial Investment | $ (130,000) | $ (130,000) | $ (130,000) | $ (130,000) | |
| Year | 1 | $ 33,000 | $ (97,000) | $ 30841 | $ (99,159) |
| Year | 2 | $ 33,000 | $ (60,000) | $ 28,823 | $ (70,335) |
| Year | 3 | $ 33,000 | $ (31,000) | $ 26,938 | $ (43,398) |
| Year | 4 | $ 30,000 | $ (1,000) | $ 22,887 | $ (20,511) |
| Year | 5 | $ 30,000 | $ 29,000 | $ 21,390 | $ 879 |
Please find the answer for the Payback Period, Discounted Payback, NPV, IRR for Project One. Explain how to get the answer.
Solutions
Expert Solution
| Cash Flow | |||||||||
| Project 1 | Cum. CF | PVIF @ 7% | Discounted CF | Cum. CF | |||||
| Initial Investment | -130000 | -130000 | 1.0000 | (130,000.00) | (130,000.00) | ||||
| Year | 1 | 33000 | -97000 | 0.9346 | 30,841.12 | (99,158.88) | |||
| Year | 2 | 33000 | -64000 | 0.8734 | 28,823.48 | (70,335.40) | |||
| Year | 3 | 33000 | -31000 | 0.8163 | 26,937.83 | (43,397.57) | |||
| Year | 4 | 33000 | 2000 | 0.7629 | 25,175.54 | (18,222.03) | |||
| Year | 5 | 33000 | 35000 | 0.7130 | 23,528.54 | 5,306.52 | |||
| 5,306.52 | |||||||||
| Ans 1 | Payback period = | 3+31000/33000 | 3.94 | year | |||||
| Ans 2 | Discounted payback period = | 4+18222.03/23528.54 | 4.77 | year | |||||
| Ans 3 | NPV = | 5,306.52 | |||||||
| Ans 4 | IRR = | 8.51% | |||||||
jeff jeffy answered 4 months agoRelated Solutions
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