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IBL project requires an investment of $15,900 and has an expected life of 5 years. Ignore tax. Annual cash flows at the end of each year are as follows: Amount in $ 4,000 6,200 4,000 2,000 6,100 Year 1 2 3 4 Economic growth 2.5% Inflation Rate 4% Risk Premium 1.8% REQUIRED 1. Compute the payback period 2. Find the discounted Payback Period 3. What is the Net Present Value and the Profitability index. 4. Find the IRR of this project. Is it profitable?

IBL project requires an investment of $15,900 and has an expected life of 5 years. Ignore tax. Annual cash flows at the end of each year are as follows: Amount in $ 4,000 6,200 4,000 2,000 6,100 Year 1 2 3 4 Economic growth 2.5% Inflation Rate 4% Risk Premium 1.8% REQUIRED 1. Compute the payback period 2. Find the discounted Payback Period 3. What is the Net Present Value and the Profitability index. 4. Find the IRR of this project. Is it profitable?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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IBL project requires an investment of $15,900 and has an expected life of 5 years. Ignore tax. Annual cash flows at the end of each year are as follows: Amount in $ 4,000 6,200 4,000 2,000 6,100 Year 1 2 3 4 5 Economic growth Inflation Rate 2.5% 4% Risk Premium 1.8% REQUIRED 1. Compute the payback period 2. Find the discounted Payback Period 3. What is the Net Present Value and the Profitability index. 4. Find the IRR of this project. Is it profitable?
Transcribed Image Text:IBL project requires an investment of $15,900 and has an expected life of 5 years. Ignore tax. Annual cash flows at the end of each year are as follows: Amount in $ 4,000 6,200 4,000 2,000 6,100 Year 1 2 3 4 5 Economic growth Inflation Rate 2.5% 4% Risk Premium 1.8% REQUIRED 1. Compute the payback period 2. Find the discounted Payback Period 3. What is the Net Present Value and the Profitability index. 4. Find the IRR of this project. Is it profitable?
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