1.Project M has a cost of $65,125, expected net cash inflows of $13,000 per year for ten years, and a cost of capital of 11%. What is the project’s payback period (to the closest year)?
2. What is the project’s NPV?
3. What is the project’s IRR?
4. What is the project’s discounted payback period?
5. What is the project’s MIRR?
6. Based on the answers to questions 1–5, should the project be accepted? Why or why not?
7. Your division is considering two facility investment projects, each of which requires an upfront expenditure of $15 million. You estimate that the invest- ments will produce the following net cash flows:
Year Project A Project B
1 $5,000,000 $20,000,000
2 $10,000,000 $10,000,000
3 $20,000,000 $6,000,000
What are the project’s net present values, assuming the cost of capital is 10%? 5%? 15%? What does this analysis tell you about the projects?
