Compute the project payback period and net present value

Assignment Help Financial Management

Reference no: EM131513491

The SL High Tech is planning a new investment project which is expected to yield cash inflows of $395,000 per year in Years 1 through 3, $286,000 per year in Years 4 through 6, and $278,000 in Years 7 through 10. This investment will cost the company $1,850,000 today (initial outlay). We assume that the firm's cost of capital is 7.5%.

(1) Draw a time line to show the cash flows of the project.

(2) Compute the project’s payback period, net present value (NPV), profitability index (PI), internal rate of return (IRR), and modified internal rate of return (MIRR).

(3) Discuss whether the project should be taken.

Reference no: EM131513491

Questions Cloud

No one would purchase and exercise an option to buy stock : No one would purchase and exercise an option to buy stock when the stock could be purchased for a price that is less than the strike price.

Discussion about communication : Describe at least 2 issues that the speaker can present in a conversation, followed by at least 2 issues that the listener can cause.

Which alternative should be selected : If the bank's cost of capital is 10%, which alternative should be selected?

Draw shear and moment curves for each member of frame : Draw the shear and moment curves for each member of the frame and draw the deflected shape. Joints B and C are rigid.

Compute the project payback period and net present value : Compute the project’s payback period, net present value (NPV), profitability index (PI), internal rate of return (IRR), and modified internal rate of return.

Calculate the irr of the projects : Assume your require a 10 percent return on your investment. calculate the IRR of the projects.

Compare and contrast a business case and a business plan : Compare and contrast a Business Case and a Business Plan. Include definitions and applications.

Show all forces acting on a free-body diagram : For the frame in Figure, draw the shear and moment curves for all members. Next sketch the deflected shape of the frame. Show all forces acting on a free-body.

In a capital budgeting analysis : In a capital budgeting analysis, interest paid on a loan that must be taken to finance the project must be included in the analysis.

User Account

All Pages