A capital investment project is estimated to have the following after-tax cash flows, by year:
(Use the information in the table above for the following questions. The company utilizes a discount rate of 12% to evaluate capital projects. You may have rounding errors in your calculations so choose the closest answer.
The answers are provided below please explain how to set up the answers and how to solve the problems.
1) The PAYBACK for the project shown above is:
a) 2.37
b) 2.00
c) 3.00
d) 2.50
2) The DISCOUNTED PAYBACK for the project shown above is:
a) 2.57
b) 3.08
c) 3.20
d) 3.56
3) The NET PRESENT VALUE for the project shown above is:
a) $10,708
b) $9,325
c) $46,527
d) $11,213
4) The INTERNAL RATE OF RETURN for the project shown above is:
a) 21.49%
b) 21.42%
c) 19.27%
d) 23.62%
13) The PROFITABILITY INDEX for the project shown above is:
a) 0.33
b) 1.27
c) 1.60
d) 2.57