Now calculate the projects NPV, IRR, MIRR and regular payback.?

Answer 1

NPV = NPV discounts future cash flows at a certain discount rate to get the present value of future cash flows and subtracts the cash outlay of the project. If the NPV of a prospective project is positive, it should be accepted. However, if NPV is negative, the project should probably be rejected because cash flows will also be negative.

IRR = The discount rate often used in capital budgeting that makes the net present value of all cash flows from a particular project equal to zero.

MIRR = While the internal rate of return (IRR) assumes the cash flows from a project are reinvested at the IRR, the modified IRR assumes that all cash flows are reinvested at the firm's cost of capital. Therefore, MIRR more accurately reflects the profitability of a project.

Payback = The length of time required to recover the cost of an investment. Payback = Cost/Cash Inflows

Answer 2

YES, YOU HAVE TO USE ALL THE OUTFLOW AS WELL AS THE CASH INFLOW.. THIS WILL INCLUDE DEPRECIATION AND LIQUIDATION OF ASSETS.BUT IN ANY FINANCIAL PROJECTIONS AND VALUATION, TIMING IS THE MOST CRITICAL. MONEY TODAY IS BETTER THAN MONEY TOMORROW. SO MAYBE YOU CAN ACCELERATE YOUR DEPRECIATION TO AVOID THOSE NEGATIVE CASH FLOWS.

Answer 3

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