NPV Profile

Topics: Net present value, Internal rate of return, Cash flow Pages: 2 (298 words) Published: November 2, 2014
For Project A, anything under 21.88% is acceptable and for Project B, anything under 20.62% is acceptable. The crossover rate, where the NPVs are the same is 8.16%. Project AProject B

Required Return8.25%Required Return8.25%
Cash FlowsPeriod Cash FlowsCash FlowsPeriod Cash Flows Initial Outlay-8,5000-8,500Initial Outlay-9,5000-9,500
13,60013,900
22,40022,900
32,85032,900
45,20045,550

Discounted Payback Period3.23Discounted Payback Period3.28 NPV$2,907.51 NPV$2,905.64
Profitability Index1.3421Profitability Index1.3059
IRR21.88%IRR20.62%
MIRR16.51%MIRR15.72%
Crossover Rate8.16%

NPV Profile DataNPV Profile Data
Required ReturnNPV ARequired ReturnNPV B
0%$5,550.000% $5,750.00
5%$3,845.435% $3,915.80
10%$2,449.1210% $2,411.69
15%$1,292.2215% $1,164.15

20%$323.6920% $118.63
25%-$494.8825% $(765.92)
30%-$1,192.7630% $(1,520.83)
35%-$1,792.5535% $(2,170.28)
For Project A, anything under 21.88% is acceptable and for Project B, anything under 20.62% is acceptable. The crossover rate, where the NPVs are the same is 8.16%. Project AProject B

Required Return8.25%Required Return8.25%
Cash FlowsPeriod Cash FlowsCash FlowsPeriod Cash Flows Initial Outlay-8,5000-8,500Initial Outlay-9,5000-9,500
13,60013,900
22,40022,900
32,85032,900
45,20045,550

Discounted Payback Period3.23Discounted Payback Period3.28 NPV$2,907.51 NPV$2,905.64
Profitability Index1.3421Profitability Index1.3059
IRR21.88%IRR20.62%
MIRR16.51%MIRR15.72%
Crossover Rate8.16%

NPV Profile DataNPV Profile Data
Required ReturnNPV ARequired ReturnNPV B
0%$5,550.00...
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