Question
In: Finance
A project has an initial cost of $40,000, expected net cash flows of $9,000 per year...
A project has an initial cost of $40,000, expected net cash flows of $9,000 per year for 7 years, and a cost of capital of 11% Calculate in excel NPV, IRR, PB, DPB?
Solutions
Expert Solution
Cash flows and discounted cash flows are
| Year | Cash flows | DCF |
| 0 | (40,000.00) | (40,000.00) |
| 1 | 9,000.00 | 8,108.11 |
| 2 | 9,000.00 | 7,304.60 |
| 3 | 9,000.00 | 6,580.72 |
| 4 | 9,000.00 | 5,928.58 |
| 5 | 9,000.00 | 5,341.06 |
| 6 | 9,000.00 | 4,811.77 |
| 7 | 9,000.00 | 4,334.93 |
| NPV | 2,409.77 |
| IRR | 12.84% |
| Payback | 4.44 |
| Discounted payback | 6.44 |
WORKINGS
jeff jeffy answered 2 years agoRelated Solutions
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A project has an initial cost of $40,000, expected net cash inflows of $9,000 per year...
A project has an initial cost of $40,000, expected net cash
inflows of $9,000 per year for 7 years, and a cost of capital of
11%. What is the project’s NPV? (Hint: Begin by constructing a time
line.)
Financial Calculator: CFo=-40000, CF1=9000, F1=7, NPV I=11, CPT
NPV=2409.7664
NPV = $2,409.77
What is the project’s IRR?
Financial Calculator: CFo=-40000, CF1=9000, F1=7, NPV I=11, CPT
NPV=2409.7664, CPT IRR=12.842
IRR = 12.84%
What is the project’s MIRR?
What is the project’s PI?
What...
A project has an initial cost of $40,000, expected net cash inflows of $9,000 pr year...
A project has an initial cost of $40,000, expected net cash
inflows of $9,000 pr year for 7 years, and cost of capital of
11%.
a) What is the project's NPV? (Hint: Begin by constructing a
time line.)
b) What is the project's IRR?
c) What is the project's MIRR?
d) What is the project's PI?
e) What is the project's payback period?
f) What is the project's discounted payback period?
Show your steps of solving the problems.
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