Question

In: Finance

You are requested by a firm's manager to evaluate a four-year long project where applicable required...

You are requested by a firm's manager to evaluate a four-year long project where applicable required rate of return would be 13%. The cost of the project would be $140,000.00. The project is expected to generate future cash flow of $50,000.00 in each year. Find

  1. Net Present Value =
  2. Internal Rate of Return =
  3. Present Value Index =
  4. Payback Period =
  5. Discounted Payback Period =

Solutions

Expert Solution

The payback period is the time taken in years for the cumulative cash flows to become 0

Here, we observe that the cumulative cash flows become 0 after year 2

The discounted payback period is the time taken in years for the cumulative discounted cash flows to become 0

Here, we observe that the cumulative discounted cash flows become 0 after the year 3

Present value index = PV of future cashflows/Initial investment

jeff jeffy answered 1 year ago
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