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Topic: Business
Number of pages / Number of words: 3 / 785
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The equipment was sold in year 4 for $120,000, but we put in I year 3 because this was the horizon of the project and the payment will be in the beginning of year 4, so it should not be discounted by four years..

Question 3: Assume that all operating revenues and expenses occur at the end of each year...


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Calculate the Payback period, the NPV and the IRR of the project.

We are assuming that all cash flows take place at the end of the year, we end year 0 by a cash outflow of 1,050,000, year 1 we have an inflow of , year two we have an inflow of , and year three an inflow of . It takes 2.1 years in order to recover the initial investment, payback period equals 2...


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