i just need help in the last question. thanks. Payback period, NPV, PI, and IRR

Question

i just need help in the last question. thanks.

Payback period, NPV, PI, and IRR calculations) You are considering a project with an initial cash outlay of $70,000 and expected free cash flows of $20,000 at the end f each year for 5 years. The required rate of return for this project is 8 percent. What is the project's payback period? What is the project's NPVn What is the project's PI What is the project's IRR? The project's payback period is 3.5 years. (Round to two decimal places.) The projects NPV is $ 9,854.2. (Round to the nearest cent.) The the project's Plis 1.14. (Round to three decimal places.) The project's IRR is 1-196. (Round to two decimal places.)

Explanation / Answer

Initial Cash Outlay = $70,000
Annual Free Cash Flow = $20,000
Period = 5 years

Let IRR be i%

NPV = -$70,000 + $20,000 * PVIFA(i%, 5)
0 = -$70,000 + $20,000 * PVIFA(i%, 5)

Using financial calculator:
N = 5
PV = -70000
PMT = 20000
FV = 0

I/Y = 13.20%

So, IRR of this project is 13.20%

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.