You are considering a project with an initial cash outlay of $72,000 and expected cash flows of $22,320 at the end of each year for six year . The discount rate is 10.3 percent.
Part 1:
The payback period of the project is ___ years
If the discount rate for this project is 10.3% , the discounted payback period of the project is ___ years?
Part 2:
The projects NPV is $_____?
Part 3:
The projects PI is ____?
Part 4:
The projects IRR is ___%?
You are considering a project with an initial cash outlay of $72,000 and expected cash flows of $22,320 at the end of each year for six year . The discount rate is 10.3 percent.
Part 1:
The payback period of the project is ___ years
If the discount rate for this project is 10.3% , the discounted payback period of the project is ___ years?
Part 2:
The projects NPV is $_____?
Part 3:
The projects PI is ____?
Part 4:
The projects IRR is ___%?
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Bader has been retained to analyze two proposed capital investment projects. projects X and Y. by Star Fashion LLC, a local specialty retailer. Project X is a sophisticated working capital and inventory control system based upon a powerful personal computer. called a system server and PC software specifically designed for inventory processing and control in the retailing business. Project Y is a similarly sophisticated working capital and inventory control system based upon a powerful personal computer and general-purpose PC software. Each project has a cost of S100,000, and the cost of capital for both projects is 12%. The projects' expected net cash flows are as follows:
Expected Net Cash Flow
| Years |
Project X |
Project Y |
| 0 |
($ 100,000) |
($100,000) |
| 1 | 65,000 | 35,000 |
| 2 | 30,000 | 35,000 |
| 3 | 10,000 | 35,000 |
| 4 | 10,000 | 35,000 |
A. Calculate each project's nominal payback period.
B. Calculate Net Present Value (NPV) and comment upon if the two projects are independent or interdependent.
