Capital Budgeting Techniques to Evaluate Project

Estimated Cost of Project :
Total Assets of Your Company: 115,438
x project % of total assets 2%
Proposed Capital Expenditure $2,309
rounded to nearest $ million = $2,000,000
$(2,000,000)

Opportunity cost of project: 69,226,000 12,717,000 81,943,000 0.155193244 0.02 0.844806756 0.51
(assuming 4% return on savings)
3,959,396.68
800000
Payback Period of Project: $(2,000,000) $(1,200,000) $(400,000) $400,000 $1,200,000 $2,000,000 $2,800,000 $3,600,000 $4,400,000 $5,200,000 $6,000,000
(assuming an $3 million increase in annual net income over the next 10 years)

$4

Net Present Value of Project:
(assuming discount rate of 12%; and $3 million increase in annual net income over the next 10 years) $18,984,749.38 $2,000,000 0.12

$16,984,749.38

Can you find the IRR? [the discount rate that results in an NPV = 0?
31%

Time line for your use: 0 1 2 3 4 5 6 7 8 9 10
(amounts are in millions)

3 3 3 3 3 3 3 3 3 3
Cash Outlay = 2% of total assets=