Question

Sun King Computers is considering the following project. The projected net cash flows are: Initial Cost...

Sun King Computers is considering the following project. The projected net cash flows are:
Initial Cost is $3.5 million; annual net cash flows are $815,000 per year for 7 years.
What is the Discounted Payback Period if the appropriate discount rate is 7.5%?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Year Cash flows Present [email protected]% Cumulative Cash flows
0 (3,500,000) (3,500,000) (3,500,000)
1 815000 758139.54 (2741860.46)
2 815000 705246.08 (2036614.38)
3 815000 656042.86 (1380571.52)
4 815000 610272.43 (770299.09)
5 815000 567695.29 (202603.8)
6 815000 528088.64 325484.84
7 815000 491245.24 816730.08

Hence discounted Payback period=Last period with a negative cumulative cash flow+(Absolute value of cumulative cash flows at that period/Cash flow after that period).

=5+(202603.8/528088.64)

=5.38 years(Approx).

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Hendrix Guitars is considering the following project. The Project cash flows are below: Initial Cost is...
Hendrix Guitars is considering the following project. The Project cash flows are below: Initial Cost is $ 2.1 million; annual net cash flows are $750,000 per year for 5 years. what is the Profitablity Index If the appropriate discount rate is 7.5%?
You are considering a project with an initial cost of $35,000 and cash inflows of $20,000,...
You are considering a project with an initial cost of $35,000 and cash inflows of $20,000, $15,000, $10,000, and $5,000 over the next four years, respectively. If you require a 13% rate of return and have somehow decided on an appropriate discounted payback period of 3.5 years, should you accept this project? Why or why not? Group of answer choices A. Yes, because the discounted payback period is over 3.5 years B. No, because the discounted payback period is over...
Gio's Restaurants is considering a project with the following expected cash? flows: Year Project Cash Flow?...
Gio's Restaurants is considering a project with the following expected cash? flows: Year Project Cash Flow? (millions) 0 ?$(210?) 1 100 2 72 3 100 4 90 If the? project's appropriate discount rate is 11percent, what is the? project's discounted payback? period? The? project's discounted payback period is ____ years? Round to 2 decimal places
King Fisher Aviation is evaluating an investment project with the following case flows: $6,000 $5,500 $7,000...
King Fisher Aviation is evaluating an investment project with the following case flows: $6,000 $5,500 $7,000 $8,000 Discount rate 14 percent What is the discounted payback period for these cash flows if the initial cost is 15,000? What if the initial cost is $12,000? What if the cost is $16,000? show all work
​(Discounted payback period​) Sheinhardt Wig Company is considering a project that has the following cash​ flows:...
​(Discounted payback period​) Sheinhardt Wig Company is considering a project that has the following cash​ flows: If the​ project's appropriate discount rate is 9 ​percent, what is the​ project's discounted payback​ period? The​ project's discounted payback period is nothing years. ​(Round to two decimal​ places.) YEAR   PROJECT CASH FLOW 0   -60,000 1   20,000 2   50,000 3   65,000 4   55,000 5   40,000
A project has the following total (or net) cash flows.                ________________________________________             
A project has the following total (or net) cash flows.                ________________________________________                 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 project is $100,000. a) Find the (regular) payback period of the project. b) Compute the discounted payback period of the project.
A project has the following total (or net) cash flows.                ________________________________________             
A project has the following total (or net) cash flows.                ________________________________________                 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 project is $100,000. a) Find the (regular) payback period of the project. b) Compute the discounted payback period of the project.
Net present value. Quark Industries has a project with the following projected cash​ flows: Initial​ cost:...
Net present value. Quark Industries has a project with the following projected cash​ flows: Initial​ cost: ​$200,000 Cash flow year​ one: ​$23,000 Cash flow year​ two: ​$72,000 Cash flow year​ three: ​$157,000 Cash flow year​ four: ​$157,000 a.  Using a discount rate of 10​% for this project and the NPV​ model, determine whether the company should accept or reject this project. b.  Should the company accept or reject it using a discount rate of 14​%? c.  Should the company accept...
Net present value. Lepton Industries has a project with the following projected cash​ flows: Initial cost  ...
Net present value. Lepton Industries has a project with the following projected cash​ flows: Initial cost   Cash flow year one   Cash flow year two   Cash flow year three   Cash flow year four $463,000   $124,000   $240,000   $185,000   $124,000 a. Using a discount rate of 99​% for this project and the NPV​ model, determine whether the company should accept or reject this project. b. Should the company accept or reject it using a discount rate of 1717​%? c. Should the company accept...
An investment project has annual cash inflows of $5,100, $3,200, $4,400, and $3,600, for the next...
An investment project has annual cash inflows of $5,100, $3,200, $4,400, and $3,600, for the next four years, respectively. The discount rate is 15 percent. a. What is the discounted payback period for these cash flows if the initial cost is $5,000? b. What is the discounted payback period for these cash flows if the initial cost is $7,100? c. What is the discounted payback period for these cash flows if the initial cost is $10,100?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT