Problem:
Calculate for the Strident Marks CFO, key financial metrics for this capital budgeting project. These key metrics must include payback period, net present value, internal rate of return and modified rate of return. Describe what each of these metrics tells us.
Key Financial Data for Strident Marks Project
Project's Discount Rate 10%
Time Period (in years)
O 1 2 3
Cash Out ($10,000)
Cash In $7,500 $7,500 $7,500
-Assume cash flows occur at the beginning of the period)
(year 1 cash flow occurs 12 months after the initial investment)