# NPV, IRR, MIRR, Profitability Index, Payback, Discounted Payback,

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(10-1)

NPV

A project has an initial cost of $40,000, expected net cash inflows of $9,000 per year for 7 years, and a cost of capital of 11%. What is the project's NPV (Hint: Begin by constructing a time line.)

(10-2)

IRR

Refer to Problem 10-1. What is the Project's IRR?

(10-3)

MIRR

Refer to Problem 10-1 What is the project's MIRR?

(10-4)

Profitability Index

Refer to Problem 10-1. What is the project's PI?

(10-5)

Payback

Refer to Problem 10-1. What is the project's payback period?

(10-6)

Discounted Payback

Refer to Problem 10-1. What is the project's discounted payback period?

(10-7)

NPV

Your division is considering two investment projects, each of which requires an up-front expenditure of $15 million. You estimate that the investments will produce the following net cash flows:

Year Project A Project B

1 $5,000,000 $20,000,000

2 10,000,000 10,000,000

3 20,000,000 6,000,000

a. What are the two projects' net present values, assuming the cost of capital is 5%? 10%? 15%?

b. What are the two projects' IRRs at these same costs of capital?

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Solution helps in estimating NPV, IRR, MIRR, Profitability Index, Payback, Discounted Payback,

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