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What is the project payback period

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Q1. You are considering a project with an initial cash outlay of $160,000 and expected free cash flows of $40,000 at the end of each year for 5 years. The required rate of return for this project is 10 percent.

a. What is the project's payback period?

b. What is the project's NPV?

c. What is the project's PI?

d. What is the project's IRR?

Q2. Fijisawa Inc. is considering a major expansion of its product line and has estimated the following cash flows associated with such an expansion. The initial outlay would be $4,950,000, and the project would generate incremental free cash flows of $1,250,000 per year for 5 years. The appropriate required rate of return is 9 percent.

a. Calculate the NPV.

b. Calculate the PI.

c. Calculate the IRR.

d. Should this project be accepted?

Reference no: EM132743582

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