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
Colorado Company has decided to use the loss carryback and carryforward provision as a result of the year 2017 loss. The enacted tax rate remains at 40% after year 2017. Color
You own a stock portfolio invested 35 percent in Stock Q, 20 percent in Stock R, 30 percent in Stock S, and 15 percent in Stock T. The betas for these four stocks are 0.77,
Define current assets and current liabilities. Why are current assets and current liabilities separated from noncurrent assets and long-term liabilities on the balance sheet
Design an observational study of your own, including the creation of a set of behavioral categories that would be used to code for one or more variables of interest to you.
Mr. Miser loans money at an annual rate of 73 percent compounded daily. You decide to borrow $10,000 from him and must repay the full principal and interest at the end of 2
L. company recently reported the following income statement for 2004. The corporation forecasts that its sales will increase by 8 percent in 2005 and its operating costs will
Consider a market for a homogeneous product with demand given by Q = 30 - P/2. There are two firms, each with constant marginal cost equal to 20. Determine output and price
A 7.5 percent coupon bond has a face value of $1,000, pays interest semi-annually, has 8 years to maturity, and is currently selling for $996.34. What is the yield-to-maturi