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Payback period, IRR and NPV

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Your company uses a 12% annual rate to discount cash flows for NPV. The following table presents the costs of each investment (negative values in time zero) and the expected cash flows for each investment each year.

Period A B C
0 -500 -2000 -500
1 200 400 300
2 300 500 200
3 400 800 100
4 500 900 0
5 0 1000 0

1. Calculate the payback period for each investment.
2. Calculate the IRR for each investment.
3. Calculate the NPV for each investment.

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Solution Summary

Excel file contains calculations of payback period, IRR and NPV for 3 investment options.

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