XYZ Inc. wants to invest $1 million in a capital project that would generate $300,000 in savings

Question:

XYZ Inc. wants to invest $1 million in a capital project that would generate $300,000 in savings each year. The physical life of the project is 10 years, and the cost of capital is 10%. Using the above information, calculate the following:

1. Payback period

2. Net present value

3. Internal rate of return

4. Profitability index

Net Present Value
What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at... 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...