Raul Mateus case study week six - Raul Mateus Finance Case...

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Raul Mateus Finance Case Study 1. a) Payback period: After 4 years, $584M will be recovered. After 5 years, $794M will be. Therefore, the payback will during the fifth year. ($650M-$584M)/($794M-$584M) = 0.314. 4.314 years b) IRR: between 13.25% and 13.3%: 13.253% c) R = 12% (given). NPV = -$650M + $80M/(1.12) + $121M/(1.12)2 + $162M/(1.12)3 + $221M/ (1.12)4 +
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Unformatted text preview: $210M/(1.12)5 + $154M/(1.12)6 + $108M/(1.12)7 + $86M/(1.12)8 - $72M/ (1.12)9 = $28,451,509.51. d) PI = (NPV – CF0) / CF0 = ($28,451,509.51 + $650M) / $650M = 1.04 2. Based on my analysis I would say yes because the NPV indicates that, given the company’s 12% required return, the cash flows will yield a net positive result....
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