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Winston Clinic is evaluating a project that costs $50,000 and has expected net cash inflows of...

Winston Clinic is evaluating a project that costs $50,000 and has expected net cash inflows of $12,000 per year for eight years. The first inflow occurs one year after the cost outflow, and the project has a cost of capital of 12%.

1. What is the project’s NPV?

2. What is the project’s IRR?

3. What is the project’s MIRR?

The director of capital budgeting for Big Sky Health System, Inc. has estimated the following cash flows for a new service and has a cost of capital of 10%.

What is the project’s payback period?

Year Annual Cash Flows Project Cost of Capital 10%

0 $ (125,000)

1 $ 75,000

2 $ 55,000

3 $ 25,000

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