Project 1 Initial $ 150,000.00 Investment Cost of Capital 10% Target Payback 4 years Cash Flow...

		Project 1
Initial		$ 150,000.00
Investment
Cost of Capital		10%
Target Payback		4 years

			Cash Flow
		Project 1	Cum. CF	Discounted CF	Cum. CF
Initial Investment		$ (150,000)	$ (150,000)	$ (150,000)	$ (150,000)
Year	1	$ 35,000	$ (115,000)	$ 31,818	$ (118,182)
Year	2	$ 35,000	$ (80,000)	$ 28,926	$ (89,256)
Year	3	$ 45,000	$ (35,000)	$ 33,809	$ (55,447)
Year	4	$ 45,000	$ 10,000	$ 30,736	$ (24,711)
Year	5	$ 45,000	$ 55,000	$ 27,941	$ 3,230

Please find the answer for the Payback Period, Discounted Payback, NPV, IRR for Project One. Explain how to get the answer
.

Expert Solution


		Cash Flow
		Project 1	Cum. CF	PVIF @ 10%	Discounted CF	Cum. CF
Initial Investment		-150000	-150000	1.0000	(150,000.00)	(150,000.00)
Year	1	35000	-115000	0.9091	31,818.18	(118,181.82)
Year	2	35000	-80000	0.8264	28,925.62	(89,256.20)
Year	3	45000	-35000	0.7513	33,809.17	(55,447.03)
Year	4	45000	10000	0.6830	30,735.61	(24,711.43)
Year	5	45000	55000	0.6209	27,941.46	3,230.03
					3,230.03
Ans 1	Payback period =				3+35000/45000		3.78	year
Ans 2	Discounted payback period =				4+24711.43/27941.46		4.88	year
Ans 3	NPV =						3,230.03
Ans 4	IRR =						10.80%

jeff jeffy answered 5 months ago

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