Develop your own model that can be used to determine the Net Present Value (NPV), Internal Rate of Return (IRR), Modified Internal Rate of Return (MIRR), and Profitability Index (PI)?

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Net Present Value (NPV): NPV is calculated by discounting the future cash flows of a project at a required rate and then subtracting the initial cost. The formula for calculating NPV is as follows:
NPV = Σ t=0n(CFt/(1+r)ⁿ- C)
Where CFt stands for the Cash Flow in period ‘t’, r stands for the discount Rate, and C denotes initial Cost.

Internal Rate of Return (IRR): IRR is defined as the rate at which all present values of cash inflows are equal to all present values of cash outflows. It gives an indication of how profitable a particular project will be if it’s undertaken. The formula used to calculate IRR is:
IRR = [CF₀ + CF₁/(1+r)¹ + CF2/(1+r)² + …..]/[C – CFn/(1+r)ⁿ]
Where CF stands for total Cash Flow in each period, r stands for Discount Rate and C denotes Initial Cost.

Modified Internal Rate of Return (MIRR): MIRR adjusts the original internal rate of return calculation by incorporating two different discount rates; one for positive cash flows and another one for negative ones. This helps enhance accuracy when evaluating projects with multiple inflows or outflows over time. The formula used to calculate MIRR can be expressed as follows:
MIRR = [(CFu – Fn)/(F0 – Cf0)]^(1/N)- 1 Where F0 represents Initial Investment, Fn represents Terminal Value ,N represent Number Of Years , CFu signifies total Positive Cash Flows while CfO denote Total Negative Cash Flows .

Profitability Index (PI): PI helps measure returns on investment relative to costs incurred; thus providing an indication as to whether or not a certain project should be pursued or not according to its financial performance potential. It can be calculated using this formulation: PI = Σ t=0n(CFt / (1+r)ᵗ ) / I where I signifies Initial Investment , r denotes Discount Rate while t refers to time periods respectively.