Project Z has a cost of $ 50,000.00, its expected net cash flows are $11,000 per year for 8 years, and its cost of capital is 12 % (Hint: begin by constructing a time line).
Instructions:
a. Calculate the project's payback period.b. Calculate the project's discounted payback period.c. Calculate the project's NPV.d. Given that IRR for project Z = 15%, compared to another project; project B that has IRR= 18%? Evaluate project Z.
You plan to invest your money in a project that has the following set of cash flows?
Year Cash Flows
0 -$2,500 1 300 2 1,500 3 1,100 4 1,000
a. Calculate the project's payback period.b. Calculate the project's discounted payback period given that cost of capital is 12 %.c. Calculate the project's NPV.d. According to the results in the previous sections; will you invest your money in the project? Explain.