Howlett, Newman & Associates Limited is considering four projects to modernise their operations. The initial capital outlay for each project is $280,000. The cost of capital for the company is 8%. The cash flow for each project are detailed in the table below. Year Import/Expor Restarurant Transportation Landscaping initial (280,000) (280,000) (280,000) (280,000) Outlay 1 125,000 185,000 150,000 2 88,000 66,000 3 69,000 56,000 52,000 160,000 4 42,000 38,000 60,000 132,000 5 62,000 65,000 6 30,000 i) Caculate each project's Payback period i) Calculate each project's Net Present Value (NPV). iii) Calculate the MIRR of the projct with highest NPV.
Question
Howlett, Newman & Associates Limited is considering four projects to modernise their operations. The initial capital outlay for each project is $280,000. The cost of capital for the company is 8%. The cash flow for each project are detailed in the table below.
Year Import/Expor Restarurant Transportation Landscaping initial (280,000) (280,000) (280,000) (280,000) Outlay
1 125,000 185,000 150,000
2 88,000 66,000
3 69,000 56,000 52,000 160,000
4 42,000 38,000 60,000 132,000
5 62,000 65,000
6 30,000
i) Caculate each project's Payback period
i) Calculate each project's
iii) Calculate the MIRR of the projct with highest NPV.
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