Business, 19.08.2020 01:01 TheViperMlg23676

Project Y costs $50,000, its expected cash inflows are as follows-- year 1: $19,000; year 2: $20,000; year 3: $18,000; year 4: $19,000; year 5 $20,000; year 6: $17,000, and its WACC is 7%. a. What is the project's NPV?
b. What is the project's IRR?
c. What is the project's MIRR?
d. What is the project's Payback Period?
e. What is the project's Discounted Payback?

Answers: 1

Show answers

Answers

Answer from: WhiteWinterRose

a. $40,001.70

b. 30.19 %

c. 18,01% .

d. 2 years and 7 months

e. 3 years

Explanation:

Calculation of NPV using a financial calculator :

-$50,000 CFj

$19,000 CFj

$20,000 CFj

$18,000 CFj

$19,000 CFj

$20,000 CFj

$17,000 CFj

i/yr 7%

Shift NPV $40,001.70

Calculation of IRR using a financial calculator :

-$50,000 CFj

$19,000 CFj

$20,000 CFj

$18,000 CFj

$19,000 CFj

$20,000 CFj

$17,000 CFj

Shift IRR 30.19 %

Calculation of MIIR :

The First Step is to Calculate the Terminal Value at end of year 6.

Terminal Value (FV) = Sum of (PV x (1 + r) ^ 6 - n)

=$19,000 x (1.07) ^ 5 + $20,000 x (1.07) ^ 4 + $18,000 x (1.07) ^ 3 + $19,000 x (1.07) ^ 2 + $20,000 x (1.07) ^ 1 + $17,000 x (1.07) ^ 0

= $26,648.48 + $26,215.92 + $22,050.77 + $21,753.10 + $21,400 + $17,000

= $135,068.27

The Next Step is to Calculate the MIRR using a Financial Calculator :

-$50,000CFj

0 CFj

$135,068.27 CFj

Shift IRR/Yr18,01%

Therefore, the MIRR is 18,01% .

Calculation of the Payback Period :

$50,000 = Year 1 ($19,000) + Year 2 ($20,000) + $11,000 / $18,000

= 2 years and 7 months

Calculation of the project's Discounted Payback :

$50,000 = $19,000 / (1.07)^1 + $20,000 / (1.07)^2 + $18,000/ (1.07)^3 + $19,000/ (1.07)^4

= Year 1 ($17,757.01) + Year 2 ($17,468.77) + Year 3 ($14,693.36) + $80.83 / $14,495

= 3 years

Answer from: Quest

Ibelieve that the answer is d. because that is the only option that is efficient.

Answer from: Quest

participate in networking opportunities that allow you to get to know potential clients, other entrepreneurs, influential people in your community, etc. focus on doing everything you can to cultivate posting word of mouth advertisin

Another question on Business

Business, 22.06.2019 02:00

Answer the following questions using the information below: southwestern college is planning to hold a fund raising banquet at one of the local country clubs. it has two options for the banquet: option one: crestview country club a. fixed rental cost of $1,000 b. $12 per person for food option two: tallgrass country club a. fixed rental cost of $3,000 b. $8.00 per person for food southwestern college has budgeted $1,800 for administrative and marketing expenses. it plans to hire a band which will cost another $800. tickets are expected to be $30 per person. local business supporters will donate any other items required for the event. which option has the lowest breakeven point?

Answers: 1

Answer

Business, 22.06.2019 13:30

Tom has brought $150,000 from his pension to a new job where his employer will match 401(k) contributions dollar for dollar. each year he contributes $3,000. after seven years, how much money would tom have in his 401(k)?

Answers: 3

Answer

Business, 22.06.2019 15:00

(a) what do you think will happen if the price of non-gm crops continues to rise? why? (b) what will happen if the price of non-gm food drops? why?

Answers: 2

Answer

Business, 22.06.2019 23:00

Acollege registrar's office requires you to first visit with one of three advisors and then with one of two financial professionals. this system best described as which of the following? a. single server, single phase systemb. multiple server multiphase systemc. multiple server, cross phase systemd. single server, multiphase systeme. multiple server, single phase system

Answers: 2

Answer

You know the right answer?

Project Y costs $50,000, its expected cash inflows are as follows-- year 1: $19,000; year 2: $20,000...

Questions