Calculate each project payback period


1.The director of capital budgeting for Big Sky Health Systems Inc. has estimated the following cash flows in thousands of dollars for a proposed new service:

A.)Year Expected Net Cash Flow

A.0 ($100)
B.1 $70
C.2 $50
D.3 $20

B.)The project’s cost of capital is 10%.

a. What is the project’s payback period?
b. What is the project’s NPV?
c. What is the project’s IRR?
d. What is the project’s MIRR?

2.Assume that you are the chief financial officer at Porter Memorial Hospital. The CEO has asked you to analyze two proposed capital investments – Project X and Project Y. Each project requires a net investment outlay of $10,000 and the cost of capital for each project is 12%. The project’s expected net cash flows are as follows:Year Project X Project Y

0 ($10,000) ($10,000)
1 $6,500 $3,000
2 $3,000 $3,000
3 $3,000 $3,000
4 $1,000 $3,000

a. Calculate each project’s payback period?
b. Calculate net present value (NPV)?
c. Calculate internal rate of return (IRR)?
d. Which project (or projects is financially acceptable?
e. Explain your answer.

Can these calculation be put on an excel spreadsheet? I need this by 5:00pm Anchorage, Alaska time. Is this possible???

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Finance Basics: Calculate each project payback period
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