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Internal Rate of Return, Payback Period & NPV

An investment of $83 generates after-tax cash flows of $50.00 in Year 1, $70.00 in Year 2, and $133.00 in Year 3. The required rate of return is 20 percent. The net present value is

Mavis, Inc., is evaluating a project. The company uses a 13.8 percent discount rate for this project. Cost and cash flows are shown in the table. What is the NPV of the project?
Year Project

0 ($11,368,000)

1 $ 2,127,590

2 $ 3,787,552

3 $ 3,125,650

4 $ 4,115,899

5 $ 4,556,424

Lorne inc is getting ready to produce a new line of gold clubs by investing $1.85 million. The investment will result in additional cash flows of $525,000, $817,500, and $1,215,000 over the next three years. What is the payback period for this project?

Lower Inc. is adding to its existing buildings at a cost of $2 million. The gallery expects to bring in additional cash flows of $520,000, $700,000, and $1,000,000 over the next three years. Given a required rate of return of 10 percent, what is the NPV of this project?

Solution Summary

The solutions depict the steps to calculate NPV and payback period as per the requirements. Attached as Excel.

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