Question 13.18: You are evaluating an investment project with the following ...

You are evaluating an investment project with the following cash flows:

Period Cash Flow
0 $100,000
1 35,000
2 35,000
3 35,000
4 35,000

Calculate the following:

a. Payback period

b. Discounted payback period, assuming a 10% cost of capital

c. Discounted payback period, assuming a 16% cost of capital

d. Net present value, assuming a 10% cost of capital

e. Net present value, assuming a 16% cost of capital

f. Profitability index, assuming a 10% cost of capital

g. Profitability index, assuming a 16% cost of capital

h. Internal rate of return

i. Modified internal rate of return, assuming reinvestment at 0%

j. Modified internal rate of return, assuming reinvestment at 10%

The Blue Check Mark means that this solution has been answered and checked by an expert. This guarantees that the final answer is accurate.
Learn more on how we answer questions.
a. Payback = 3 years
b. Discounted payback at 10% = 4 years
c. Discounted payback at 16% #NAME?
d. Net present value at 10% = $10,945.29
e. Net present value at 16% = $2,063.68
f. Profitability index at 10% = 1.11
g. Profitability index at 16% = 0.98
h. Internal rate of return = 0.15
i. Modified internal rate of return with reinvestment at 0%
[Terminal value = $140,000] = 0.088
j. Modified internal rate of return with reinvestment at 10%
[Terminal value = $162,435] = 0.129

 

Related Answered Questions