In: Finance
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
.
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% |