The director of capital budgeting for Big Sky Health Systems Inc. has estimated the following cash flows (in thousands of dollars) for a proposed new service:

Year     Expected Net Cash Flow

0                     ($100)

1                       70

2                      50

3                       20

The project's opportunity cost of capital is 10 percent.

a. What is the project's payback period?

b. What is the project's NVP?

c. What is the project's IRR?

Answer rating: 100% (QA)

First lets clarify some terms 1 Payback Period This is the time taken to break even in terms of recovering the initial investment in this case 100 tho... View the full answer