Question

Given the following cash flows for a capital project, calculate the Payback period, NPV, PI, IRR, and MIRR. The required rate of return is 8 percent.

Year	CF
0	$(50,000.00)
1	$15,000.00
2	$15,000.00
3	$15,000.00
4	$15,000.00
5	$5,000.00

Answer 1

Calculation's Recquired Rate of Return = 8%. as Initial Investment = ($50.ooo) 1 [ Year o Cash place) 6 Annual Cashflow's Pva Cashflone year Year Cashflow Cumulative present salue lin$) Cashflow @ 8% Sooot I is.000 15.000 LR888.89 ((1+08) 15.000 30.000 12.860.08 (77.681% 3 is.000 45.000 11.907.48 (17.083) is.000 60.000 11.025.45 (810 S as.000 65.000 3,402.92 / sooo s I (it Recoquiored Return car ISOOO swN 1+08 e Present Value of = $53.084.82 a Castellones Besent Values of Summual Cashflows's - $5.3.084.82

a) Payback = Year leefare full Recovery O Period + Unrecovered Cost at the Start of the Year Cashflow during the year 150.000 - 45,000) 15,000 3 + :33 Poriad year is 3.33 year I Payleack b) NPV Net Present - Value Present Value of Annual Corkflow's - Initial Investment = $ 53,084.82 - $ 50,000 = $ 3.084.82 V

cole Grafitability - Index Present Value of Initial Annual Cashflow's Insestment $ 53,084.82 $ 50,000 PI = 1.06

d) IRR Internal (By trial Rate of Return) S Error Methad) NPV @ 10% is $ 652.5g (Lower Rote NPV @ ill. is 04-496.06 (Higher Rote) IRR = Lower & dlv at lawer hate x Difference in Rate NPV at - Nly at Rates lauser Rate Higher Rate = 10 + 652.59 682.59 - (-496.06) x (11-10) IRR = 10.57 1.