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Please solve it urgently with formulas, details and explanation! A project manager is working on justification of a project. Since very little information is known
Please solve it urgently with formulas, details and explanation!
A project manager is working on justification of a project. Since very little information is known about the project, some rough estimates have been gathered. Following table is prepared to show the cash inflow and outflow for the following years:
Year Cash In Flow ($) Cash Out Flow ($) 0 900 200 1 2 3 4 5 0 300 400 500 500 900 200 300 200 300 a) (6 pts) What is the payback period for this project? b) (8 pts) If the required rate of return is 20%, is the project mentioned above acceptable? Use NPV. c) (4 pts) Calculate profitability index to determine if the project acceptable. Use 20% interest rate. d) (2 pts) If the required rate of return is accepted as 15%, how this affects the NPV of the project. There is no need for calculation, only make comment. NOTE: Show the calculations for the question a, b, and c and fill in the table below. Year Cash In Flow ($) Net cash flow Cum Cash Flow Discounted Cash Flow ON Cash Out Flow ($) 900 200 200 300 200 300 0 300 400 500 500 900 2 3 4 5 Discounted Cash Flow (NPV) Net Cash In Flow Net Cash Out Flow Profitability Index Payback PeriodStep by Step Solution
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