FIN 370 Chapter 11-24 Wk 4 Solution

FIN 370 Chapter 11-24 Wk 4 Solution

FIN 370 Chapter 11-24 Wk 4

FIN 370

11–24. (Payback period, net present value, profitability index, and internal rate of return

calculations) You are considering a project with an initial cash outlay of $80,000 and

expected cash flows of $20,000 at the end of each year for six years. The discount rate

for this project is 10%.

a. What are the project’s payback and discounted payback periods?

b. What is the project’s NPV?

c. What is the project’s PI?

d. What is the project’s IRR?