Question

A project has outflows of $100,000 today, $100,000 in one year, and $50,000 in two years. It is then projected to generate annual inflows of $50,000 for 10 years starting three years from today (end of year 3). Cost of capital is 13%. What is this project's PI? Round to two decimal places.

Answer 1

А JOS D16 fc =SUM(D3:015) в с р 1 Project B 2 year C ash flows pv@13% Present value Cumulative Outflows Cumulative Inflows 0 $(100,000.00) 1.0000 $(100,000.00 $ (100,000.00) 1 $ (100,000.00) 0.8850 $ (88,495.58) $ (188,495.58) 2 $ (50,000.00)| 0.7831 $ (39,157.33) $ (227,652.91) 3 $ 50,000.00 0.6931 $ 34,652.51 34,652.51 4 $ 50,000.00 0.6133 $ 30,665.94 65,318.44 5 $ 50,000.00 0.5428 $ 27,138.00 92,456.44 6 $ 50,000.00 0.4803 $ 24,015.93 116,472.37 7 $ 50,000.00 0.4251 $ 21,253.03 137,725.40 81 $ 50,000.00 0.3762 $ 18,807.99 156,533.39 12 9 $ 50,000.00 0.3329 $ 16,644.24 173,177.63 13 10 $ 50,000.00 0.2946 $ 14,729.42 187,907.05 14 11 $ 50,000.00 0.2607 $ 13,034.88 200,941.93 15 12 $ 50,000.00 0.2307 $ 11,535.29 $ 212,477.23 16 IRR 11.67% NPV $ (15,175.68)|| 17 18 PV of Inflows/PV of outflows 212477.23/227652.91 0.93 19

016 - =SUM(D3:015) fx в pv@13% 1 Project B 2 year 30 41 5 2 6 3 74 85 96 10 7 118 129 13 10 14 11 15 12 16 IRR Cash flows -100000 -100000 -50000 50000 50000 50000 50000 50000 50000 50000 50000 50000 50000 =IRR(B3:B15) =C3/1.13 =C4/1.13 =C5/1.13 =C6/1.13 =C7/1.13 =C8/1.13 =C9/1.13 =C10/1.13 =C11/1.13 =C12/1.13 =C13/1.13 =C14/1.13 NPV Present value =B3*C3 =B4*C4 =B5*C5 =B6*C6 =B7*C7 =B8*C8 =B9*C9 =B10*C10 =B11*011 =B12*C12 =B13*C13 =B14*014 I=B15*C15 =SUMD3:D15) Cumulative Outflows Cumulative Inflows =D3 =E3+D4 =E4+D5 =D6 =F6+D7 =F7+D8 =F8+D9 =F9+D10 =F10+D11 =F11+D12 =F12+D13 =F13+D14 =F14+D15 PV of Inflows/PV of outflows 212477.23/227652.91 =212477.23/227652.91