A company is considering a project (Project A) that produces the following cash flows. Assume that the cash flow is complete at the end of each year. The company's cost of capital is 7%.

Project A

year 0 = -390,000,000 ISK

year 1 = ISK 190,000,000

year 2 = ISK 30,000,000

year 3 = ISK 90,000,000

year 4 = ISK 80,000,000

year 5 = ISK 120,000,000

year 6 = 260,000,000 ISK

a) Calculate the payback period of the project

b) Calculate the discounted payback period of the project.

c) Calculate the present value (NPV) of the project

d) Calculate the project's internal rate of return (IRR).

e) Calculate the improved internal rate of return (MIRR) of the project and assume that the company grows the cash flow at a 6% interest rate.

f) Calculate the EAA (equivalent annual annuity) of the project.

Answer rating: 100% (QA)

Here are the calculations for the given project cash flows a Payback period Cumulative cash flows Ye... View the full answer