Project Alpha requires an initial outlay of $35,000 and results in a single cash inflow of $56,367 50 after five years a If the cost of capital is 8 , what are Alphas NPV and PI Is the project acceptable under each of these techniques b What is project Alphas IRR Is it acceptable under IRR c What a...

a NPV 35000 5636750 PVF 85 35000 5636750 6806 35000 38363 ...

Project Alpha requires an initial outlay of $35,000 and results in a single cash inflow of $56,367.50

Question:

Project Alpha requires an initial outlay of $35,000 and results in a single cash inflow of $56,367.50 after five years.
a. If the is 8%, what are Alpha’s NPV and PI? Is the project acceptable under each of these techniques?
b. What is project Alpha’s IRR? Is it acceptable under IRR?
c. What are Alpha’s NPV and PI if the is 12%? Is the project acceptable under that condition?
d. What is Alpha’s payback period? Does payback make much sense for a project like Alpha? Why or why not?

Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...