Project X exhibits the following cash-flow pattern. Initial Investment $325,000 Year Cash-Flow 1 $140,000...
Homework Answers
a) npv is present value of cashflows less initial investment
| year | cashflows | pv@11% | DCF |
| 0 | -325,000.00 | 1.0000 | -325000 |
| 1 | 140,000.00 | 0.9009 | 126126.1261 |
| 2 | 120,000.00 | 0.8116 | 97394.69199 |
| 3 | 100,000.00 | 0.7312 | 73119.13813 |
| 4 | 75,000.00 | 0.6587 | 49404.82306 |
| npv | 21044.77931 |
B) profitability index= pv of cash flows/initial investment
= 346044/325000 = 1.06475
c) irr is 14.34%
as irr is more than cost of capital project is accepted
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Project X exhibits the following cash-flow pattern.
Initial Investment $325,000
Year Cash-Flow
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