Calculate pay back analysis and Net present value based on the below scenarios

 

1.  Payback Analysis

Don't use plagiarized sources. Get Your Custom Essay on
Calculate pay back analysis and Net present value based on the below scenarios
Just from $13/Page
Order Essay

Two new wind-farm tower projects are proposed for a small company that installs them in south western Pennsylvania. Project A will cost $250,000 to complete and is expected to have an annual net cash flow of $75,000. Project B will cost $150,000 to complete and should generate annual net cash flows of $52,000. As a small company, the owner and senior management team are very concerned about their cash flow.

Use the payback period method and determine which project is better from a cash flow standpoint

Show your work and include any formulas used to calculate PP.

2.  Net Present Value

A recent project nominated for consideration at your company has a four-year cash flow of $20,000; $25,000; $30,000; and $50,000. The cost of the project is $75,000.

a.  If the required rate of return is 20%, conduct a discounted cash flow calculation to determine the NPV.

b.  What is the benefit-cost ratio for the project?

c.  What would the NPV of the above project be if the inflation rate was expected to be 4% in each of the next four years?

You will be assessed on the correctness of your calculations (40 points) and on presenting your work and results in a professional manner (10 points)

Calculator

Calculate the price of your paper

Total price:$26
Our features

We've got everything to become your favourite writing service

Need a better grade?
We've got you covered.

Order your paper