Question

1. Zayes, LLC. has identified the following cashflows for a four-year project.

Year                          Cashlow

1.    -$79,80
2. 34,000
3. 41,000
4. 28,000
5. 21,000

1. What is the project’s payback period?
2. What is the IRR for this project? If the required return is 11 percent, should the project be accepted based on the IRR decision rule?
3. If the required return is 11 percent, what is the NPV for this project? Should the project be accepted based on the NPV decision rule?

Answer 1

Solution :-

(A) Project Payback Period = 2.17 Years

(B) IRR = 22.38%

Accept the Project as IRR greater than the required return

(C) NPV = 18,414

Accept the Project as NPV is greater than equal to Zero .

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