Calculate the net present value-payback
Course:- Finance Basics
Reference No.:- EM13746739

Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Finance Basics

(Part 1)

Using a 5% discount rate, calculate the Net Present Value, Payback, Profitability Index, and IRR for each of the investment projects below (note, the inflows are for each year). Based on your calculations rank the projects and support you answer.

Project 1

Initial Invest= $500,000, Cash inflows of $100,000 for years 1-5 and $50,000 for years 6-10.

Project 2

Initial Invest= $1,000,000, Cash inflows of $400,000 for years 1-3, $0 for years 4-7 and $250,000 for years 8-10.

Project 3

Initial Invest= $800,000, Cash inflows of $300,000 for years 1-5, $0 for years 6-9 and $100,000 for year 10.

(Part 2)

Assuming a budget of $1,200,000 what are your recommendations for the three projects in the above problem. Explain.

Assuming a budget of $2,000,000 what are your recommendations for the above problem? Explain.

Put your comment

Ask Question & Get Answers from Experts
Browse some more (Finance Basics) Materials
What is the primary competitive forces impacting U.S. steel producers? Do you believe these competitive forces negatively or positively impact the steel industry's competitiv
Who Dat Restaurant is considering the purchase of a $9,300 soufflé maker. The soufflé maker has an economic life of four years and will be fully depreciated by the straight-
Determine the annual financing cost of forgoing the cash discount under each of the following credit terms: a. 2/10, net 60 b. 1½ /10, net 60  c. 2/30, net 60 d. 5/30, net fou
Develop a three- to five-page analysis on the projected return on investment for your college education and projected future employment. This analysis will consist of two pa
A firm's bonds have a maturity of 21 years with a $1,000 face value, a 7 percent semiannual coupon, are callable in 4 years at $1,060, and currently sell at a price of $1,12
Create a SWOT Analysis for each of the two chosen companies change plans/programs, utilizing information obtained in the diagnosis. (Strengths, Weaknesses, Opportunities, Thre
In March, the SEC charged four companies with ties to a secondary market. Do you agree with the article's premise? What are the implications of this crackdown? And how will th
company pays a current dividend (D0) of $1.20 per share on its common stock. The annual dividend will increase by 3% and 4%, respectively, over the next two years (D1, D2),