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Consider the new product launch project that Maxwell-Cone Enterprises is considering.The CA-200 project is a proposed EV Go-Kart that requires an initial investment of $1,500,000 in production...

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Consider the new product launch project that Maxwell-Cone Enterprises is considering.The CA-200 project is a proposed EV Go-Kart that requires an initial investment of $1,500,000 in production infrastructure in2019 (year 0) for production to begin in 2020. Free Cash Flows for the project for years 1 - 8 are shown below.The introduction of a new product at year 9 will terminate further cash flows from this project.Assume a cost of capital of 15% where necessary to solve the following.
Year CA-2000 -$1,500,0001 $320,0002 $350,0003 $385,0004 $425,0005 $470,0006 $400,0007 $201,0008 $75,000
What is the undiscounted Payback Period for project CA-200 Go-Kart Project?
What is the discounted payback period for this project?
What is the NPV of the project?
What is the Internal Rate of Return (IRR) for the project?
Answered Same Day Jun 20, 2021

Solution

Aarti J answered on Jun 22 2021
143 Votes
Sheet1
            2019    2020    2021    2022    2023    2024    2025    2026    2027
        year    0    1    2    3    4    5    6    7    8
        Initial investment    -1500000
        Cash flows    -1500000    320000    350000    385000    425000    470000    400000    201000    75000
        Cumulative cash flows    -1500000    -1180000    -830000    -445000    -20000    450000    850000    1051000    1126000
        Present value factor @...
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