Please remember to round your answer to two decimal places.
Problem 10-03 MIRR
A project has an initial cost of $43,425, expected net cash inflows of $12,000 per year for 10 years, and a cost of capital of 8%. What is the project's MIRR? Do not round intermediate calculations. Round your answer to two decimal places.______%
Problem 10-04 Profitability Index
A project has an initial cost of $61,000, expected net cash inflows of $12,000 per year for 11 years, and a cost of capital of 9%. What is the project's PI? Do not round your intermediate calculations. Round your answer to two decimal places. ________
Problem 10-05 Payback
A project has an initial cost of $59,050, expected net cash inflows of $13,000 per year for 8 years, and a cost of capital of 13%. What is the project's payback period? Round your answer to two decimal places._______ years
Problem 10-06 Discounted Payback
A project has an initial cost of $60,000, expected net cash inflows of $14,000 per year for 7 years, and a cost of capital of 13%. What is the project's discounted payback period? Round your answer to two decimal places.________ years
Please remember to round your answer to two decimal places.
Answer 10-03:
Workings:
Answer 10-04:
Initial cash outflow = $61,000,
Expected net cash inflows per year for 11 years = $12,000
PV Factor for a One-Dollar Annuity Discounted at 9% for 11 Periods = [1 - 1 / (1 + k) n] / k
= (1 - 1/ (1+9%) 11) / 9% = 6.805191
PV of annual cash flows = $12,000 * 6.805191 = $81,662.29
PI = PV of annual cash flows / Initial cash outflow = $81,662.29 / $61,000 = 1.3387 = 1.34
Answer 10-05:
Since project's annual cash flows are uniform:
Project's payback period = Initial cost / Annual cash flow
= $59,050 / $13,000 = 4.5423 = 4.54 years
Answer 10-06:
Workings:
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