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    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 Summary

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

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