Question

only questions 3 & 5 please odd only

(Internal Rate of Return) Calculate the project's internal rate of return. An initial cash outflow of $6,235 and a free cash flow of $7,125 in 5 years. An initial cash outflow of $6,235 and a free cash flow of $7,125 in 3 years 3. а. b. An initial cash outflow of $6,235 and a free cash flow of $7,125 in 10 years An initial cash outflow of $6,235 and a free cash flow of $1,125 at the end of the next 5 years С. d. An initial cash outflow of $6.235 and a free cash flow of $1,125 at the end of the next 3 years. followed by $1,025 at the end of 5 years. е. An initial cash outflow of $6,235 and a free cash flow of $1,125 at the end of the next 3 years, followed by $1,025 at the end of 5 years. An initial cash outflow of $6,235 followed by $1,025 at the end of 2 years and a free cash flow of $1,125 at the end of the next 3 years. (Net Present Value) Calculate the project's net present value. The cost of capital is 10 % An initial cash outflow of $6,235 and a free cash flow of $7,125 in 5 years f. 4. а. An initial cash outflow of $6,235 and a free cash flow of $7,125 in 3 years b. An initial cash outflow of $6,235 and a free cash flow of $7,125 in 10 years с. An initial cash outflow of $6,235 and a free cash flow of $1,125 at the end of the next 5 years d. An initial cash outflow of $6,235 and a free cash flow of $1,125 at the end of the next 3 years, followed by $1,025 at the end of 5 years. An initial cash outflow of $6,235 and a free cash flow of $1,125 at the end of the next 3 years, followed by $1,025 at the end of 5 years. е. f. An initial cash outflow of $6,235 followed by $1,025 at the end of 2 years and a free cash flow g. of $1,125 at the end of the next 3 years (Payback period, IRR,& NPV) You are considering a project with an initial cash outlay of $5,275, 5. expect to receive free cash flows $2,125 at the end of each year for the next 7 years. If the and required rate of return is 10%, what is the firm's Payback period? a. b. NPV? IRR? с. Should this project be accepted? (use answers to parts b and c) d.

Answer 1

3).

Answer 1 7125 23 71257125 5 5 71257125 6 8 9 10 71257125712571257125 Part (36) Part (3a) Part (3) Year (n) Cash flow (FCF) IRR (3 years) IRR (5 years) IRR (10 years) 0 -6235 99.99% 111.58% 114.22%

(Solved using IRR function with given cash flows)

3d). IRR = [(1,125/6,235)^(1/5)] -1 = -29.00%

Answer 0 -6235 -21.91% 0 1 0 2 0 3 4 11250 5 1125 Year (n) Cash flow (FCF) IRR Year (n) Cash flow (FCF) IRR Part (3e) & (3) Answer 1 2 1025 3 1125 -6235 Part (39) -33.87%

5a).

Formula Year (n) Cash flow (CF) Cumulative cash flow (CCF) Payback period in years) 01 -5275 -5275 2.48 1 2 125 -3150 2 2125 - 1025 3 2125 1100 2125 3225 5 2125 5 350 2125 7475 2125 9600|| CFn + CCFn-1 2 + (-CCF2/CF3)

5b & c).

Formula 6 Year (n) Cash flow (CF) 0 -5275 1 2125 2 2125 3 2125 4 2125 5 2125 2125 7 2125 Using NPV function with CFs & 10% discount rate NPV 5070.39 Using IRR function with CFS IRR 35.47%

5d). The project should be accepted as it has a positive NPV and an IRR much greater than the required return of 10%, so it will yield profits.