NPV, IRR, PICapital Budgeting: NPV, PI, IRR

Years012345678910Project A$(240,000.00)$50,000.00$50,000.00$50,000.00$50,000.00$50,000.00$50,000.00$50,000.00$50,000.00$10,000.00Interest Rate = 10.00%NPV$30,987.29NINV$(240,000.00)

PV of 1 NCF$45,454.55

PV of 2 NCF$41,322.31

PV of 3 NCF$37,565.74

PV of 4 NCF$34,150.67

PV of 5 NCF$31,046.07

PV of 6 NCF$28,223.70

PV of 7 NCF$25,657.91

PV of 8 NCF$23,325.37

PV of 9 NCF$4,240.98

PV of 10 NCF0.0$270,987.29Total of all CF$30,987.29

PI:$1.1291

IRR13.39%

PBPayback Period12%Project AUndiscountedDiscounted (at 12%)Year(t)Cash InflowCumulative Cash InflowCash InflowCumulative Cash Inflow0$(1,950,000.00)$(1,950,000.00)$(1,950,000)$(1,950,000)1$510,000.00$(1,440,000.00)$455,357$(1,494,643)2$510,000.00$(930,000.00)$406,569$(1,088,074)3$510,000.00$(420,000.00)$363,008$(725,066)4$510,000.00$90,000.00$324,114$(400,952)5$510,000.00$600,000.00$289,388$(111,564)6$510,000.00$1,110,000.00$258,382$146,8187$510,000.00$1,620,000.00$230,698$377,5168$510,000.00$2,130,000.00$205,980$583,4969$510,000.00$2,640,000.00$183,911$767,40710$510,000.00$3,150,000.00$164,206

PB= NINV/Annual cash inflowsFor cash flows of same amount each yearorNumber of years before full recovery of NINV+Unrecovered initial investment at start of year / Cash inflow during yearFor cash flows of different amountsPB for Project A=3.82yearsPB for Project A=5.43years(Discounted)2.5x2+500000

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