Ch_09_Inclass_Exercises_Solutions

Ch_09_Inclass_Exercises_Solutions - Period Cashflow...

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1 Ch 09 Inclass Exercises Solutions 1. Calculate Payback manually Project Cash Flows 0 -100,000 -100,000 1 32,000 -68,000 2 55,000 -13,000 3 45,000 32,000 Payback = 2 + 13,000 / 45,000 = 2.29 2. A project has an NPV of $ 5,250 and an initial investment of $ 30,750. Calculate the Profitability Index manually. PI = 5250/30750 = 1.17 3. Calculate Payback, NPV, IRR, and PI. (2.66, -10,030, 7.3%, 0.95)
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Unformatted text preview: Period Cashflow 0 -200,000 1 65,000 2 72,000 3 95,000 4 0 5 0 6 0 7 0 8 0 9 0 10 0 11 0 12 0 Rate 10.00% NPV (10,030) IRR 7.30% PI 0.95 Payback 2.66 Sign reverses 2 4. Calculate the NPV Crossover Point. (16.19%) Crossover Point Calculation Project A Project B A - B 0 -1,500 -1,400 -100 1 925 925 0 2 925 790 135 3 0 0 0 4 0 0 0 5 0 0 0 Crossover Point (IRR of A-B) 16.19%...
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Ch_09_Inclass_Exercises_Solutions - Period Cashflow...

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