Question
Consider the following project being analyzed for possible investment at ABC Corp. Initial Cost $50 Inflow Year 1 $15 Inflow Year 2 $15 Inflow Year
Consider the following project being analyzed for possible investment at ABC Corp. Initial Cost $50 Inflow Year 1 $15 Inflow Year 2 $15 Inflow Year 3 $20 Inflow Year 4 $10 Inflow Year 5 $10 All amounts are in millions. The required return for the project is 8%. ABCs benchmark payback rules are as follows: only accept projects with a payback period of 2.5 years or less, or a discounted payback of 5 years or less.
1. What is the projects NPV? 2. What is the projects IRR? 3. What is the projects payback period? 4. What is the projects discounted payback period? 5. What is the projects PI? 6. What is the projects MIRR using a reinvestment rate equal to the discount rate of 8%
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