Question

Given a project with the following cash flows and a cost of capital of 9%. Calculate the NPV, IRR, MIRR, and PI. For each of the four calculations, give a brief interpretation of what it measures and how it should be used to evaluate a project. Should the project be accepted? Why or why not?

Time Period        Cash Flow

        0                         -$200,000

        1                         $50,000

        2                         $70,000

        3                         -$80,000

        4                         $75,000

        5                         $100,000

        6                         $120,000

Given the following cash flows, calculate the payback and the discounted payback for this project assuming a cost of capital of 10%. Provide an interpretation for each.

Time Period        Cash Flow

        0                         -$500,000

      1                         $100,000

        2                         $140,000

        3                         $180,000

        4                         $170,000

        5                         $150,000

Answer 1