Compute the payback period for this project » Full Grade

Questions –

Q1. Bobby’s Italian Ice corporation is considering investing in a new Italian Ice machine. The machine will cost $500,000. The cash flows resulting from the investment are as follows: Year 1: $200,000; Year 2: $300,000; Year 3: $450,000].  Calculate the IRR of the project.

Q2. Big Boy Burgers has to buy a new grill. The equipment will cost $15,000. The cash flows resulting from the investment are as follows: Year 1: $7,000; Year 2: $9,500; Year 3: $10,000; Year 4: $3,000. Calculate the IRR of the project.

Q3. Printer Express Inc is considering investing in a new factory to build more printers and copy machines. The cost of the factory is $3,500,000. The net cash flows resulting from the investment are as follows: Year 1: $900,000; Year 2: $800,000; Year 3: $750,000; Year 4: $650,000; Year 5: $500,000; Year 6: $450,000. Compute the payback period for this project.

Q4. Due to an unforeseen case of asthma, Big Wolf Demolition has to buy a wrecking ball. The ball, along with its equipment, will cost $10,000. The cash flows resulting from the investment are as follows: Year 1: $6,000; Year 2: $7,500; Year 3: $7,000; Year 4: $2,000. Calculate the IRR of the project.