Assume a company has an initial cash outflow of $50,000, followed by after-tax cash inflows as shown. The company’s required rate of return (WACC) is 10%.
_0__10%______1_______2______ 3_______4_______5_____ 6______7______8_
(50,000) 10,000 12,000 18,000 18,000 12,000 9,000 11,000 10,000
1. Using the time line shown above, calculate the Net Present Value for this project.
2. Using the time line shown above, calculate the Internal Rate of Return for this project.
3.Using the time line shown above, calculate the Modified Internal Rate of Return for this project. (Finance rate is 0 and investment rate is 12%)
4. Using the time line shown above, calculate the Payback Period for this project.
5. Using the time line shown above, calculate the Discounted Payback Period for this project.
6. Using the time line shown above, calculate the Profitability Index for this project. Make sure ICO is positive.