a) Calculate the discounted payback period for the project. b) Calculate the Net Present Value of the project. c) Mr. Mokhodu, the recently hired manager for this potential project is not convinced that using the IRR is sufficient to assess the project’s viability. Calculate the Modified Internal Rate of Return (MIRR) that should be used. A company is evaluating whether a new potential project should be taken on. The project willrequire an initial investment worth R 1,760,000. The project has an expected economic life of6 years and a cost of capital of 9%. The project's expected cash inflows are as seen below.Year 1Year 2Year 3Year 4Year 5Year 6350,000440,000500,000600,000660,000600,000

The term "discounted payback period" refers to the length of time required to recover an initial…

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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a) Calculate the discounted payback period for the project.

b) Calculate the Net Present Value of the project.

c) Mr. Mokhodu, the recently hired manager for this potential project is not convinced that using the IRR is sufficient to assess the project’s viability. Calculate the Modified Internal Rate of Return (MIRR) that should be used.

A company is evaluating whether a new potential project should be taken on. The project will
require an initial investment worth R 1,760,000. The project has an expected economic life of
6 years and a cost of capital of 9%. The project's expected cash inflows are as seen below.
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
350,000
440,000
500,000
600,000
660,000
600,000

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