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A new machine will cost $150,000 to place into operation. It is expected to have yearly...

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Finance

A new machine will cost $150,000 to place into operation. It isexpected to have yearly cash flows of $50,000 for the first fiveyears. The company required rate of return is 9%.

1. Compute the Project's NPV.

2. Compute the Project's IRR.

3. How long is the project's payback period?

4. How long is the project's discounted payback period?

Answer & Explanation Solved by verified expert
3.8 Ratings (543 Votes)
Answer 1 Years Cash Flows PVF 9 Present Value 0 150000 1 15000000 1 50000 09174 4587156 2 50000 08417 4208400 3 50000 07722 3860917 4 50000 07084 3542126 5 50000 06499 3249657 Total 100000 44483 Answer 3 CALCULATION OF THE PAYBACK PERIOD OF THE PROJECT Years Cash Flows Cumulative Cash Flow 0 150000 15000000 1 50000 10000000 2 50000 5000000 3 50000 000 4 50000 5000000 5 50000 10000000 Total 100000 All the    See Answer
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Transcribed Image Text

A new machine will cost $150,000 to place into operation. It isexpected to have yearly cash flows of $50,000 for the first fiveyears. The company required rate of return is 9%.1. Compute the Project's NPV.2. Compute the Project's IRR.3. How long is the project's payback period?4. How long is the project's discounted payback period?

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