Project XYZ requires an initial cash outlay of 50m. it was initially believed that this investment would create cash inflows of 16m in each of the following three years, and 12m in each of the next two years, after which the project would be complete. The payback period and internal rate of return of the project were calculated for the project. A further review of project cash flows indicated that the final cash flow in year five had been overestimated, and would probably be only 4m. what effect would this have on the two calculations?
Payback period internal rate of return.
Select one
- Increase decrease
- Increase inrcrease
- Unchanged increase
- Unchanged decrease x
