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Key Financial Metrics- payback period, NPV, IRR, MIRR

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Calculate for a company's 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 for a proposed capital budgeting project. Describe what each of these metrics tells us.

Key Financial Data for BCD Company Project

Project's discount rate 10%

Time Period (in years)
______________0____________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)

Can you explain this to me in layman's terms so that I may understand the concept.

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Solution Summary

The solution calculates key financial metrics ( payback period, net present value, internal rate of return and modified rate of return) for a capital budgeting project and describe what each of these metrics is.

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