Question
Need help figuring NPV, IRR and payback period calculations based on the following information. In this assignment, you are required to prepare a PowerPoint presentation
Need help figuring NPV, IRR and payback period calculations based on the following information. In this assignment, you are required to prepare a PowerPoint presentation reviewing 3 projects. You will calculate the NPV, IRR, and payback period for each project. Utilizing the capital budgeting calculations, you will need to select the best investment for the company. These calculations will be based on the following scenario:
AIU Industries has 3 potential projects to consider, all with an initial cost of $1,250,000. The company prefers to reject any project with a 4-year cut-off period for recapturing initial cash outflow. Given the cost of capital rates and the future cash flow for each project, determine which project the company should accept.
Cash Flow | Project A | Project I | Project U |
Year 1 | 250,000 | 450,000 | 250,000 |
Year 2 | 250,000 | 450,000 | 400,000 |
Year 3 | 250,000 | 450,000 | 600,000 |
Year 4 | 250,000 | 450,000 | 800,000 |
Year 5 | 400,000 | 400,000 | 200,000 |
Year 6 | 400,000 | 400,000 | 800,000 |
Year 7 | 400,000 | 400,000 | 600,000 |
Year 8 | 400,000 | 400,000 | 200,000 |
Cost of Capital | 4% | 6% | 8% |
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