A+ Answers

1. Determine the cash inflows and outflows for each year.  

 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

Cash Outflows      

Nurse Triage Salaries $523,800 $549,990 $577,490 $606,364 $636,682 $668,516

New IT Specialist's Salary $150,000 $154,500 $159,135 $163,909 $168,826 $173,891

Costs of Facility Renovations  $30,000     

Necessary Capital Equipment Purchases  $117,000 $3,510 $3,510 $3,510 $3,510 $3,510

Total Cash Outflow $820,800 $708,000 $740,135 $773,783 $809,018 $845,917

2. Evaluate the capital project by calculating the following metrics:

a. net present value (NPV)    

 Year  Cash Flow PV Factor @11% Present Value

 Year 0  1.0000

 Year 1 $92,000 0.9009 $82,883

 Year 2 $107,865 0.8116 $87,546

 Year 3 $126,794 0.7312 $92,711

 Year 4 $146,494 0.6587 $96,500

 Year 5 $167,881 0.5935 $99,629

b. internal rate of return (IRR)  

 Year  Cash Flow

 Year 0

 Year 1 $92,000

 Year 2 $107,865

 Year 3 $126,794

 Year 4 $146,494

 Year 5 $167,881

c. modified internal rate of return (MIRR)  

 Year  Cash Flow

 Year 0

 Year 1 $92,000

 Year 2 $107,865

 Year 3 $126,794

 Year 4 $146,494

 Year 5 $167,881

d. payback period    

 Year  Cash Flow Cumulative Cash Flow

Year 0

 Year 1 $92,000

 Year 2 $107,865

 Year 3 $126,794

 Year 4 $146,494 $52,353

 Year 5 $167,881 $220,234

e. discounted payback period      

 Year  Cash Flow PV Factor @11% Present Value Cumulative Cash Flow

 Year 0  1.0000  

 Year 1 $92,000 0.9009 $82,883

 Year 2 $107,865 0.8116 $87,546

 Year 3 $126,794 0.7312 $92,711

 Year 4 $146,494 0.6587 $96,500

 Year 5 $167,881 0.5935 $99,629 $38,469

3.Indicate whether the project is acceptable, assuming Jiranna has a corporate policy of not accepting projects that take more than 3.5 years to pay for themselves, and assuming an 11% cost of capital.