Question: 1. For an eight-year project , compute the project's NPV, IRR, and Profitability Index when: Total projected up-front costs: $2,200,000 Total projected cost of capital:
1. For an eight-year project, compute the project's NPV, IRR, and Profitability Index when:
Total projected up-front costs: $2,200,000
Total projected cost of capital: $195,000
Total projected sales: $925,000 (to grow at 10% compounded for the duration of project)
Total projected cash expense: $310,000 (to grow at 2% annually for the duration of project)
Total projected depreciation: $250,000
NPV=
IRR=
Profitability Index=
2. Now, assume the project's depreciation increased to $290,000 and needs to last 10 years instead of 8, compute the new NPV, IRR, and Profitability Index.
NPV=
IRR=
Profitability Index=
3. Lastly, assume the expenses were reduced, but the depreciation increased again to $350,000, and the project duration decreased to 6 years. What are the new NPV, IRR and Profitability Index?
NPV=
IRR=
Profitability Index=
I am coming up with conflicting calculations and need clarification. So, please show steps so that I can figure out where I am going wrong. Thank you so much!
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