FIN 370 Chapter 11-24 Wk 4 Solution - 20037

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FIN 370 Chapter 11-24 Wk 4 Solution

 

FIN 370 Chapter 11-24 Wk 4

FIN 370

 

 

11–24. (Payback period, net present value, profitability index, and internal rate of return

calculations) You are considering a project with an initial cash outlay of $80,000 and

expected cash flows of $20,000 at the end of each year for six years. The discount rate

for this project is 10%.

 

a. What are the project’s payback and discounted payback periods?

b. What is the project’s NPV?

c. What is the project’s PI?

Solution Description

            Discounted Payback Period Calculations:

                                                                                                                       Cumulative

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