Akua’s Paint Supply charges $15 per gallon of paint. Akua started with three employees, who together produced 40 gallons of pain
1 answer:
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Answer:
1. 32.68%
2 .C. Two years
Explanation:
1. Using Excel or a scientific calculator, you can calculate the IRR which is the discount rate that makes the Net Present Value to equal $0.
= IRR(-2100000,1200000,1200000,1200000)
= 32.68%
2. The Payback period is how long it takes for the cash inflows to pay off the original investment.
Original Investment = -$2,000
After year 1 = -2,000 + 600 = -$1,400
After year 2 = -1,400 + 1,400 = $0
It took 2 years to payback the original investment so Two years is the Payback period.
Answer:
MIRR = 16.6%
Explanation:
We have the formula to calculate the MIRR of the project:
+)
In which:
- FV - terminal value, the future value of net cash inflow which is assumed to be re-invested at the rate of cost of capital = WACC = 12.25%
- PV - the present value of the net cash outflows during the investment at the rate of cost of capital = WACC
- n: numbers of years (n=4)
The future value of net cash inflow Year i = Cash inflow × (1 + Cost of capital)^(number of years reinvested)
= Cash inflow × 1.1225^(n - i)
+) = $424.327
+) = $403.202
+) = $381.65
+) = $360
<em>=> Terminal Value = 424.327 + 403.202 + 381.65 + 360 = $1569.179</em>
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Present Value Year i =
The project requires the initial investment = - $850 and there are no cash outflows during 4 years of the project
<em>=> PV of the project = PV Year 0 = </em><em> = 850</em>
=> MIRR = = 0.166 = 16.6%