Question

A firm with a 13% WACC is evaluating two projects for this year's capital budget. After-tax cash flows, including depreciation, are as follows: 1 2 34 5 Project M Project N -$18,000 $6,000 $6,000 $6,000 $6,000 $6,000 -$54,000 $16,800 $16,800 $16,800 $16,800 $16,800 a. Calculate NPV for each project. Do not round intermediate calculations. Round your answers to the nearest cent. Project M: $ Project N: $ Calculate IRR for each project. Do not round intermediate calculations. Round your answers to two decimal places. Project M: Project N: Calculate MIRR for each project. Do not round intermediate calculations. Round your answers to two decimal places. Project M: Project N: Calculate payback for each project. Do not round intermediate calculations. Round your answers to two decimal places. Project M: years Project N: years Calculate discounted payback for each project. Do not round intermediate calculations. Round your answers to two decimal places. Project M: years Project N: years

Answer 1

NPV = PV of Cash Inflows - PV of Cash Outflows

Project M:

Year	CF	PVF @13%	Disc CF
0	$ -18,000.00	1.0000	$ -18,000.00
1	$    6,000.00	0.8850	$    5,309.73
2	$    6,000.00	0.7831	$    4,698.88
3	$    6,000.00	0.6931	$    4,158.30
4	$    6,000.00	0.6133	$    3,679.91
5	$    6,000.00	0.5428	$    3,256.56
NPV			$    3,103.39

Project N:

Year	CF	PVF @13%	Disc CF
0	$ -54,000.00	1.0000	$ -54,000.00
1	$ 16,800.00	0.8850	$ 14,867.26
2	$ 16,800.00	0.7831	$ 13,156.86
3	$ 16,800.00	0.6931	$ 11,643.24
4	$ 16,800.00	0.6133	$ 10,303.75
5	$ 16,800.00	0.5428	$    9,118.37
NPV			$    5,089.49