10-5. (NPV, PI, and IRR calculations) Fijisawa Inc. is considering a major expansion of itsproduct line and has estimated the following free cash flows associated with such an expansion.
The initial outlay would be $1,950,000, and the project would generate incremental free cash
flows of $450,000 per year for 6 years. The appropriate required rate of return is 9 percent.
1.
2.
3.
4.
Calculate the NPV.
Calculate the PI.
Calculate the IRR.
Should this project be accepted?
10-6. (Payback period, NPV, PI, and IRR calculations) You are considering a project with an
initial cash outlay of $80,000 and expected free cash flows of $20,000 at the end of each year for
6 years. The required rate of return for this project is 10 percent.
1.
2.
3.
4.
What is the project’s payback period?
What is the project’s NPV?
What is the project’s PI?
What is the project’s IRR?
10-7. (NPV, PI, and IRR calculations) You are considering two independent projects, project A
and project B. The initial cash outlay associated with project A is $50,000, and the initial cash
outlay associated with project B is $70,000. The required rate of return on both projects is 12
percent. Calculate the NPV, PI, and IRR for each project and indicate if the project should be
accepted.
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more