Compute the IRR, NPV, PI, and payback period for the following two projects. Assume the required return is 12%. ### Project Cash Flow AnalysisThe table below demonstrates the cash flow over a six-year period for two projects, A and B. | Year | Project A Cash Flow | Project B Cash Flow ||------|---------------------|---------------------|| 0 | -2500 | -2500 || 1 | 900 | 50 || 2 | 800 | 600 || 3 | 1600 | 150 || 4 | 100 | 900 || 5 | 50 | 500 || 6 | 300 | 2500 |#### Key Points:- **Initial Investment (Year 0):** Both projects require an initial outlay of -2500.- **Cash Inflows/Outflows:** - **Project A:** - Experiences higher cash inflows in years 1, 2, and 3, with the peak at year 3 with a flow of 1600. - Decreases significantly in years 4 and 5, before slightly increasing in year 6. - **Project B:** - Starts with lower inflows compared to Project A but steadily increases, peaking significantly at 2500 in year 6.This analysis can assist in understanding the cash flow dynamics and the potential returns from each project over the specified period.

Given, Cashflows of Project A Cashflows of project B

Answered: Compute the IRR, NPV, PI, and payback…

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Compute the IRR, NPV, PI, and payback period for the following two projects. Assume the required return is 12%.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

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K Internal rate of return and modified internal rate of return For the project shown in the following table,, calculate the internal rate of return (IRR) and modified internal rate of return (MIRR). If the cost of capital is 13.04%, indicate whether the project is acceptable according to IRR and MIRR. The project's IRR is %. (Round to two decimal places.) Data table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Initial investment (CFO) Year (t) $80,000 Cash inflows (CF₂) 1 $10,000 2345 $25,000 $10,000 $15,000 $45,000 Print Done -
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You are evaluating a project that costs $75,000 today. The project has an inflow of $ 155,000 in one year and an outflow of $65,000 in two years. What are the IRRs for the project? What discount rate results in the maximum NPV for this project? How can you determine that this is the maximum NPV?

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