Calculate the payback period and the Net present value (NPV) using the following data Returns, Investment Year 0 $0, $1M Year 1 $1M, $2M Year 2 $3M, $2M Year 3 $6M, $5M Year 4 $10M, $5M Year 5 $10M, $5M The cost of capital is 10 Use the formula NPV Future Value divided by (1 cost of capital) to the n power where n number of periods Discuss how it impacts a project decision

Question: Calculate the payback period and the Net present value (NPV) using the following data: Returns, Investment Year 0: $0, $1M Year 1: $1M, $2M Year

Calculate the payback period and the Net present value (NPV) using the following data:

Returns, Investment
Year 0: $0, $1M
Year 1: $1M, $2M
Year 2: $3M, $2M
Year 3: $6M, $5M
Year 4: $10M, $5M
Year 5: $10M, $5M
The cost of capital is 10%

Use the formula: NPV = Future Value divided by (1+cost of capital) to the n power where n = number of periods

Discuss how it impacts a project decision.

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