Question

Kerin Enterprises has a project which has the following cash flows:

YEAR CASH FLOWS

0-( -R200 000)

1- 50 000

2- 100 000

3- 150 000

4- 40 000

The required rate of return is 10%. What is the project’s discounted payback period (DPB)? Hint: Use rounded numbers, i.e. no decimal points.

Answer #1

Year | Cash flow | × discount rate | Discounted cash flow | Cumulative present worth | Balance to be recovered |

0 | $ (200,000) | 1.00000 | $ (200,000.00) | $ - | $ 200,000.00 |

1 | $ 50,000 | 0.90909 | $ 45,454.55 | $ 45,454.55 | $ 154,545.45 |

2 | $ 100,000 | 0.82645 | $ 82,644.63 | $ 128,099.17 | $ 71,900.83 |

3 | $ 150,000 | 0.75131 | $ 112,697.22 | $ 240,796.39 | $ - |

4 | $ 40,000 | 0.68301 | $ 27,320.54 | $ 268,116.93 | $ - |

Capital is recovered fully in year | 3 | ||||

Discounted pay back period is | 2 + 71900.83 / 112697.22 | 2.64 |

Discounted payback period is 3 years or 2 years, 7 months, 20 days.

Sky Enterprises is considering an investment project
with the following cash flows:
Year Cash
Flow
0
-$100,000
1
30,000
2
40,000
3
60,000
4
90,000
The company has a 7% cost of capital. What is the project’s
discounted payback period?
A. 2.76 years
B. 1.86 years
C. 1.86 years
D. 1.67 years
E. more than 3 years

You are analyzing a project and have prepared the following
data:
Year Cash flows
0 -$275,000
1 $ 50,000
2 $ 75,000
3 $ 95,000
4 $ 15,000
Required payback period 3 years
Required rate of return 5%
You are required to:
a) Determine the project’s Profitability Index, Internal Rate of
Return, NPV and Discounted Payback
Period
b) Decide whether to accept the project based on the above
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Fernando Designs is considering a project that has the
following cash flows and WACC data. What is the project's
discounted payback period? (10 points) What is the project’s
modified internal rate of return?
WACC: 10.00%
Year
0
1
2
3
Cash
flows
-$900
$500
$500 $500

Moon Enterprises has a project which has the following cash
flows:
Year
Cash Flow
0
-$500,000
1
150,000
2
200,000
3
350,000
4
140,000
5
225,000
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Question 5 options:
3.10 years
2.53 years
2.91 years
2.18 years
2.64 years

ABC Corporation is considering a project that provides the
following cash flows steam:
Year
0
1
2
3
4
5
Cash flows
-$1,000
$375
$425
$250
$110
$100
If WACC is 10%, what is NPV and should the company accept the
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Find IRR, MIRR, payback, and discounted payback period.
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Project
Year
0
1
2
3
4
A
Cash flows
-$100
$35
$35
$35
$35
B
Cash flows
-$100
$60
$50
$40
$30
Project A has...

Gio's Restaurants is considering a project with the following
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Year
Project Cash Flow? (millions)
0
?$(210?)
1
100
2
72
3
100
4
90
If the? project's
appropriate discount rate is
11percent, what is
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The? project's discounted payback period is ____
years? Round to 2 decimal places

Polk Products is considering
an investment project with the following cash flows (in
000s):
Year 0
Year 1
Year 2
Year 3
Cashflow
-100
90
90
30
The company has a 10% cost of
capital.
What is the payback period for the
project?
What is the discounted payback period for the
project?
What is the IRR for the
project?
What is the NPV for the
project?
What is the MIRR for the
project?
PLEASE SHOW STEPS AND SOLUTION

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________________________________________
Year Total (or net)
cash flow
________________________________________
1 $50,000
2 70,000
3 80,000
4 100,000
_______________________________________
The required rate of return on the project is 13 percent. The
initial investment (or initial cost or initial outlay) of the
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b) Compute the discounted payback period of the project.

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________________________________________
Year Total (or net)
cash flow
________________________________________
1 $50,000
2 70,000
3 80,000
4 100,000
_______________________________________
The required rate of return on the project is 13 percent. The
initial investment (or initial cost or initial outlay) of the
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following cash flows steam:
Year
0
1
2
3
4
5
Cash flows
-$1,000
$375
$425
$250
$110
$100
If WACC is 10%, what is NPV, and
should the company accept the project?
Find IRR, MIRR,
payback, and discounted payback
period.

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