Question

You are evaluating a project with an initial investment of $15.7 million dollars, and expected cash flows of $8 million dollars each for years 1-3. What is the project's simple payback? The corporate WACC is 11%.

Express your answer in years, rounded to 2 decimals. So, if your answer is 2.7654, then just enter 2.77.

Answer #1

Initial Investment = $ 15.7 million

Expected Cash Flow = $ 8 million for three years

WACC = 11%

Now Simple Payback is taken as the number of years taken to retrieve the cash investment

Payback = Cash Investment/Cash Inflow = 15.7/8

Simple Payback = 1.9625 or simply **1.96
years**

Also, since WACC is given we can calculate discounted payback

Cash Inflow 1 = 8 million --> Discounted = 8/1.11 = 7.21

Cash Inflow 2 = 8 million --> Discounted = 8/(1.11)ˆ2 = 6.49

Cash Inflow 3 = 8 million --> Discounted = 8/(1.11)ˆ3 = 5.85

Initial Cash Investment = 15.7 Million

We have after first two year --> 7.21+ 6.49 = 13.7 million

2 more millions left to be recovered after the first 2 years Then remaining years = 2/5.85 =0.34

Then tota**l 2.34 years**

You're evaluating a project with the following cash flows:
initial investment is $107 million dollars, and cash flows for
years 1-3 are $7 million, $55 million and $82 million dollars,
respectively. The firm's WACC is 10%. What is this project's
MIRR?
Enter your answer as a percentage, rounded to 2 decimals,
without the percentage sign. So, if your answer is 0.115678, just
enter 11.57.

You're evaluating a project with the following cash flows:
initial investment is $97 million dollars, and cash flows for years
1-3 are $11, $71 and $89 million dollars, respectively. The firm's
WACC is 6%. What is this project's MIRR?

You're evaluating a project with the following cash flows:
initial investment is $97 million dollars, and cash flows for years
1-3 are $11, $71 and $89 million dollars, respectively. The firm's
WACC is 6%. What is this project's MIRR?

You're evaluating a project with the following cash flows:
initial investment is $148 million dollars, and cash flows for
years 1-3 are $8, $61 and $70 million dollars, respectively. The
firm's WACC is 8%. What is this project's MIRR?

You're evaluating a project with the following cash flows:
initial investment is $124 million dollars, and cash flows for
years 1-3 are $10, $61 and $78 million dollars, respectively. The
firm's WACC is 10%. What is this project's MIRR?

You're evaluating a project with the following cash flows:
initial investment is $86 million dollars, and cash flows for years
1-3 are $14, $62 and $86 million dollars, respectively. The firm's
WACC is 9%. What is this project's MIRR?

Middlefield Motors is evaluating a project that would require an
initial investment of 79,077 dollars today. The project is expected
to produce annual cash flows of 7,471 dollars each year forever
with the first annual cash flow expected in 1 year. The NPV of the
project is 432 dollars. What is the IRR of the project? Answer as a
rate in decimal format so that 12.34% would be entered as .1234 and
0.98% would be entered as .0098.

Stone Inc. is evaluating a project with an initial cost of
$11,500. Cash inflows are expected to be $1,500, $1,500 and $13,000
in the three years over which the project will produce cash flows.
If the discount rate is 11%, what is the payback, net present value
and profitability index of the project?

Project A requires an initial outlay at t = 0 of $56,841, its
expected cash inflows are $11,000 per year for 9 years, and its
WACC is 13%. What is the project's IRR? Round your answer to two
decimal places.
Project P requires an initial outlay at t = 0 of $45,000, its
expected cash inflows are $15,000 per year for 9 years, and its
WACC is 12%. What is the project's MIRR? Do not round intermediate
calculations. Round your...

Project L requires an initial outlay at t = 0 of $50,000, its
expected cash inflows are $15,000 per year for 7 years, and its
WACC is 11%. What is the project's payback? Round your answer to
two decimal places.

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 1 minute ago

asked 8 minutes ago

asked 32 minutes ago

asked 44 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago