The director of capital budgeting for Big Sky Health Systems, Inc., has estimated the following cash flows

Question:

The director of capital budgeting for Big Sky Health Systems, Inc., has estimated the following cash flows in thousands of dollars for a proposed new service:

Year Expected Net Cash Flow

0..................................... ($100)

1............................................70

2............................................50

3 ...........................................20

The project’s cost of capital is 10%.

a. What is the project's payback period?

b. What is the project NPV?

c. What is the project IRR? Its MIRR?

Capital Budgeting
Capital budgeting is a practice or method of analyzing investment decisions in capital expenditure, which is incurred at a point of time but benefits are yielded in future usually after one year or more, and incurred to obtain or improve the... 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...