1.) Project K costs $75,000, its expected cash inflows are $15,000 per year for

Question

1.) Project K costs $75,000, its expected cash inflows are $15,000 per year for 9 years, and its WACC is 10%. What is the project's NPV? Round your answer to the nearest cent. 2.) Project K costs $44,657.75, its expected cash inflows are $10,000 per year for 9 years, and its WACC is 13%. What is the project's IRR? Round your answer to two decimal places. 3.) Project K costs $55,000, its expected cash inflows are $8,000 per year for 12 years, and its WACC is 14%. What is the project's payback? Round your answer to two decimal places.

Explanation / Answer

1) NPV = - $75,000 + 15,000/1.1 + 15,000/1.1^2 + 15,000/1.1^3 ..........15,000/1.1^9 =$11,385.36 2)for IRR, NPV = 0 -$44,657.75 + $10,000/(1+r) +$10,000/(1+r)^2 + $10,000/(1+r)^3 ..............$10,000/(1+r)^9 IRR = 16.90% 3) payback period = 6 + ($55,000-48000)/$8,000=6.875 years

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