Discounted Cash Flows - Evaluating Network Migration
Oceanic Organization is assessing two equally Elite Remodeled Designs with a three--year target completion scenarios. Each migration requires an investment of $10,000. The Network Migration had the following cash inflows received at the end of each year.
YEAR REMODELED REMODELED
DESIGNS 1 DESIGNS 2
1 $2,000 $6,000
2 4,000 4,000
3 6,000 2,000
TOTAL $12,000 $12,000
a. What is the net present value of each REMODELED DESIGNS using an 8% discount rate.
b. What is the effect the timing of the cash flows have on a given REMODELED DESIGNS net present value?
c. What is the payback of this investment if the annual inflow was an even $4,000 per
year.