# Calculate payback methods, discounted payback methods, net present values, internal rate of return, and profitability index. Determine what Durango should do based on calculations.

Some help on Week 3 Discussion 2 Durango

Calculate payback methods, discounted payback methods, net present values, internal rate of return, and profitability index. Determine what Durango should do based on calculations.

YR     Poofy Puffs

0       -24890000

1        12950000

2      ?

3       ?

4       ?

Poffy puffs payback method

initial outlay 24890000

(2950000 yr 1 + 10923000 yr 2) = 23873000

still need 1017000 from year 3 to payback initial outlay

1017000/8231000 =?

payback period = ?

Poofy puffs discounted payback method

PV = 1/(1+i)n

PV yr 0 = -24890000

yr 1 = 11772727.27

yr 2 = 9027272.73

yr 3 = ?

yr 4 =?

discounted payback period ?yrs

NPV = 31930455.57 (PV of yr 1, 2, 3, 4) – 24890000

NPV = ?

Profitability index = 31930455.57/24890000

Profitability index =   ?

YR    Filling Fiber

0     -13500000

1       7230000

2       8100000

3      ?

4       ?

Filling Fiber payback method

initial outlay 13500000

7230000 yr 1; need 6270000 from yr 2 to payback initial outlay

6270000/8100000 =?

payback period = ?

Filling Fiber discounted payback method

PV = 1/(1+i)n

PV yr 0 = -13500000

yr 1 = 6572727.27

yr 2 = 6694214.88

yr 3 =?

yr 4 =?

discounted payback period = ? yrs

NPV = 23328276.76 – 13500000

NPV = 9828276.76

Profitability index = 9828276.76/13500000

Profitability index =? 