Hamza has invested $300,000 and wishes to evaluate the following two projects. Her strategic plans do not allow for projects that exceed a 4 year period to repay initial costs. Years X ($) Y ($) 0 (100,000) (120,000) 1 40,000 70,000 2 40,000 50,000 3 (40,000) 40,000 4 40,000 20,000 Cost of Capital 12% 12% 

Required: Calculate the following 

1. Payback Period (PP) in nominal and discounted values. 

2. Net Present Value (NPV) 

3. Profitability Index (PI) 

4. The internal rate of return (IRR) (hint: use 30% for X and Y).

Answer rating: 100% (QA)

1 Payback Period The payback period is the amount of time it takes for an investment to generate enough cash flow to recover its initial cost We will ... View the full answer