Question: Use the information provided below to answer the following questions about Big Sky Health System, Inc. The director of capital budgeting for Big Sky Health

Use the information provided below to answer the following questions about Big Sky Health System, Inc.

The director of capital budgeting for Big Sky Health System, Inc. has estimated the following cash flows for a new service and has a cost of capital of 10%.

Year Expected Net Cash Flow
0 ($100,000)
1 $70,000
2 $50,000
3 $20,000

1a. What is the projects payback period?

Choice: 4 years

Choice: Not enough information to tell

Choice: 1.6 years

Choice: 2.4 years

1b. What is the projects NPV?

Choice: $13,981

Choice: $16,458

Choice: $22,385

Choice: $19,985

1c. What is the projects IRR?

Choice: 14.6%

Choice: 23.6%

Choice: 18.7%

Choice: 8.9%

1d. What is the projects MIRR?

Choice: 12.0%

Choice: 16.9%

Choice: 13.3%

Choice: 9.5%

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