Question: (IRR, payback, and calculating a missing cash flow) Mode Publishing is considering building a new printing facility that will involve a large initial outlay and

(IRR, payback, and calculating a missing cash flow) Mode Publishing is considering building a new printing facility that will involve a large initial outlay and then result in a series of positive free cash flows for 4 years. The estimated cash flows associated with this project are:

YEAR

PORJECT CASH FLOW

0 (initial outlay)

?

1

$

800 million

2

400 million

3

300 million

4

500 million

If you know that the project has a regular payback of 2.5 years, what is the project's internal rate of return?

If you know that the project has a regular payback of 2.5 years, what is the initial cash outlay of the project?

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