A project will cost $1,000 today and will pay back $100 one year from today (t=1),...

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Finance

A project will cost $1,000 today and will pay back $100 one yearfrom today (t=1), $200 two years from today (t=2), $500 three yearsfrom today (t=3) and $1,000 four years from today (t=4). If therequired rate of return is 7%, answer question Q1 to Q5.
Q1: What is the present value of the future cashflow?
a)1578.62
b)1439.19
c)1374.25
d)1664.83
Q2: What is the NPV of the project
a)439.19
b)1439.19
c)578.62
d)1374.25
Q3: What is the IRR of the project?
a)21.75%
b)15.39%
c)16.84%
d)19.77%
Q4: What is the payback period of the project?
a)3.5
b)3.2
c)3.8
d)4
Q5: How long is the Discounted Payback Period
a)3.28
b)3.42
c)4
d)2.77

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3.7 Ratings (588 Votes)

1 Present value of future cashflow 100 1 0071 200 1 0072 500 1 0073 1000 1 0074 Present value of future cashflow 934579 1746878 4081489 7628952 Present value of future cashflow 143919 2 NPV Present value of cash inflows present See Answer

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A project will cost $1,000 today and will pay back $100 one yearfrom today (t=1), $200 two years from today (t=2), $500 three yearsfrom today (t=3) and $1,000 four years from today (t=4). If therequired rate of return is 7%, answer question Q1 to Q5.Q1: What is the present value of the future cashflow?a)1578.62b)1439.19c)1374.25d)1664.83Q2: What is the NPV of the projecta)439.19b)1439.19c)578.62d)1374.25Q3: What is the IRR of the project?a)21.75%b)15.39%c)16.84%d)19.77%Q4: What is the payback period of the project?a)3.5b)3.2c)3.8d)4Q5: How long is the Discounted Payback Perioda)3.28b)3.42c)4d)2.77