A project has an initial cost of $40,000, expected net cash inflows of $9,000 per year...

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Finance

A project has an initial cost of $40,000, expected net cashinflows of $9,000 per year for 7 years, and a cost of capital of11%. What is the project’s NPV? (Hint: Begin by constructing a timeline.)
Financial Calculator: CFo=-40000, CF1=9000, F1=7, NPV I=11, CPTNPV=2409.7664
NPV = $2,409.77
What is the project’s IRR?
Financial Calculator: CFo=-40000, CF1=9000, F1=7, NPV I=11, CPTNPV=2409.7664, CPT IRR=12.842
IRR = 12.84%
What is the project’s MIRR?
What is the project’s PI?
What is the project’s payback period?
What is the project’s discounted payback period?

Answer & Explanation Solved by verified expert

4.3 Ratings (546 Votes)

Project Discount rate 11000 Year 0 1 2 3 4 5 6 7 Cash flow stream 40000 9000 9000 9000 9000 9000 9000 9000 Discounting factor 1000 1110 1232 1368 1518 1685 1870 2076 Discounted cash flows project 40000000 8108108 7304602 6580722 5928579 5341062 4811768 4334926 NPV Sum of discounted cash flows NPV Project 240977 Where Discounting factor 1 discount rateCorresponding period in years Discounted Cashflow Cash flow streamdiscounting factor Project IRR is the rate at which NPV 0 IRR 1284 Year 0 1 2 3 4 5 6 7 Cash flow stream 40000000 9000000 9000000 9000000 9000000 See Answer

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Transcribed Image Text

A project has an initial cost of $40,000, expected net cashinflows of $9,000 per year for 7 years, and a cost of capital of11%. What is the project’s NPV? (Hint: Begin by constructing a timeline.)Financial Calculator: CFo=-40000, CF1=9000, F1=7, NPV I=11, CPTNPV=2409.7664NPV = $2,409.77What is the project’s IRR?Financial Calculator: CFo=-40000, CF1=9000, F1=7, NPV I=11, CPTNPV=2409.7664, CPT IRR=12.842IRR = 12.84%What is the project’s MIRR?What is the project’s PI?What is the project’s payback period?What is the project’s discounted payback period?