BUSINESS DECISION MAKING PRACTICE SHEET – THE PAYBACK, NPV & IRR 1Following data shows the expected net cash flow of a company from year 1 to 8. Initial investment is £80,000. Calculate the payback period.Calculate the NPV if rate of return is 12% and advise the company.Calculate the IRR and comment on it. (Hint – IRR is between 20% and 25%) Year Net cash flow £ 1 10,000 2 20,000 3 22,000 4 25,000 5 30,000 6 35,000 7 40,000 8 41,000 2Following data shows the expected cash inflows and outflows of a company from year 1 to 5. Initial investment is £50,000. Calculate the payback period.Calculate the NPV, if the interest rate is 7% and advise the company.Calculate the IRR and comment on it. (Hint – IRR is between 15% and 20%) Year Cash Inflows £ Cash outflows £ 1 15,000 10,000 2 25,000 12,000 3 35,000 15,000 4 40,000 16,000 5 45,000 15,000 3Following data shows the expected cash inflows and outflows of a company from year 1 to 6. Initial investment is £20,000. Calculate the payback period.Calculate the NPV, if the rate of return is 20% and advise the company.Calculate the IRR and comment on it. (Hint – IRR is between 15% and 20%) Year Cash Inflows £ Cash outflows £ 1 5,000 10,000 2 8,000 11,000 3 15,000 12,000 4 25,000 12,000 5 35,000 15,000 6 45,000 16,000 4Following data shows the expected cash inflows and outflows of a company from year 1 to 5. Initial investment is £50,000. Calculate the payback period.Calculate the NPV, if the rate of return is 25% and advise the company.Calculate the IRR and comment on it. (Hint – IRR is between 15% and 20%) Year Cash Inflows £ Cash outflows £ 1 25,000 20,000 2 30,000 20,000 3 35,000 15,000 4 38,000 15,000 5 40,000 12,000
