# calculation - Year Cash flow Cumulative cash flows...

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1. A project will cost \$1.8 million. The company uses a 12% discount rate as a threshold for accepting capital projects. It is expected to have a 5 year life and return the following: Year 1 \$350,000 Year 2 \$500,000 Year 3 \$600,000 Year 4 \$800,000 Year 5 \$500,000 a. Calculate the project’s NPV b. 3730292.95??? c. Calculate the Profitability Index d. Calculate the IRR e. Calculate the Payback Period f. Calculate the Discounted Payback Period g. Assuming the funds can be invested at 5%, calculate the Terminal Value and the MIRR

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Unformatted text preview: Year Cash flow Cumulative cash flows 0 -1800000-1800000 Discount rate 12% 1 350,000-1,450,000 2 500,000-950,000 3 600,000-350,000 4 800,000 450,000 5 500,000 950,000 a. NPV \$130,292.98 c. Profitability Index = (Initai Investment + NPV)/Initial Invesment Profitability Index = 1.072385 d. IRR 15% e. Payback period 3.4375 f. Discounted payback period 3.4375 g. Terminal value = Cash flow at end of year 5/ (1 + i)^5 Terminal value = 283713.4 MIRR 11%...
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