Question

What is the payback period on each of the following projects? Given that you wish to...

  1. What is the payback period on each of the following projects?
  2. Given that you wish to use the payback rule with a cutoff period of three years, which projects would you accept?

Cash Flows, $

Project

C0

C1

C2

C3

C4

A

-10,000

+1,000

+1,000

+2,000

+6,000

B

-5,000

0

+1,000

+1,500

+3,000

C

-2,000

+2,000

+4,000

+1,000

+5,000

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Suppose your firm would like to earn 10% yearly return from the following two investment projects...
Suppose your firm would like to earn 10% yearly return from the following two investment projects of equal risk. Year (t) Cash flows from Project A (Ct) Cash flows from Project B (Ct) 0 –$8,000 –$8,000 1 $2,000 $4,000 2 $3,000 $2,000 3 $5,000 $2,500 4 $1,000 $2,000 (a) If only one project can be accepted, based on the NPV method which one should it be? Support your answer with calculations. (b) Suppose there is another four-year project (Project C)...
Suppose the cash flows for project are C0 = -2000; C1 = 500; C2 = 1000;...
Suppose the cash flows for project are C0 = -2000; C1 = 500; C2 = 1000; C3 = 4000, C4= 1000, C5= 500. The discounted payback period is ____________________ and profitability index is ___________________ at a discount rate of 10 percent.
2. A company is considering a project that has the following cash flows: C0 = -3,000,...
2. A company is considering a project that has the following cash flows: C0 = -3,000, C1 = +900, C2 = +500, C3 = +1,100, and C4 = +1,900, with a risk-adjusted discount rate of 8%. A) Calculate the Net Present Value (NPV), Internal Rate of Return (IRR), Modified Internal Rate of Return (MIRR), and Profitability Index (PI) of this project. B) If you were the manager of the firm, will you accept or reject the project based on the...
1.     Suppose your firm is considering two independent projects with the cash flows shown as follows....
1.     Suppose your firm is considering two independent projects with the cash flows shown as follows. The required rate of return on projects of both of their risk class is 12 percent, and the maximum allowable payback and discounted payback statistic for the projects are two and a half and three years, respectively. Time 0 1 2 3 Project A Cash Flow ?5,000 1,000 3,000 5,000 Project B Cash Flow ?10,000 5,000 5,000 5,000 Use the payback decision rule to...
Calculating Payback Period and NPV - Fuji software, Inc., has the following mutually exclusive projects Year...
Calculating Payback Period and NPV - Fuji software, Inc., has the following mutually exclusive projects Year Project A Project B 0 -$15,000 -$18,000 1 9,500 10,500 2 6,000 7,000 3 2,400 6,000 a. Suppose Fuji’s payback period cutoff is two years. Which of these two projects should be chosen? b. Suppose Fuji uses the NPV rule to rank these two projects. Which project should be chosen if the appropriate discount rate is 15 percent?
You are considering three independent projects, Project A, Project B and Project C. Given the following...
You are considering three independent projects, Project A, Project B and Project C. Given the following cash flow information, calculate the payback period for each. Year Project A Project B Project C 0 (Investment) ($ 900) ($ 9,000) ( $7,000) 1 $ 600 $ 5,000 $ 2,000 2 $ 300 $ 3,000 $ 2,000 3 $ 200 $ 3,000 $ 2,000 4 $ 100 $ 3,000 $ 2,000 5 $ 500 $ 3,000 $ 2,000
Marielle Machinery Works forecasts the following cash flows on a project under consideration. It uses the...
Marielle Machinery Works forecasts the following cash flows on a project under consideration. It uses the internal rate of return rule to accept or reject projects. C0 C1 C2 C3 − $ 10,200 0 + $ 7,700 + $ 8,700 Calculate the IRR. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) IRR % ? Should this project be accepted if the required return is 14%? Yes No
7)      A company uses the payback method to evaluate capital budgeting projects.  It is currently considering projects A,...
7)      A company uses the payback method to evaluate capital budgeting projects.  It is currently considering projects A, B and C. Project A             Project B              Project C Initial cost (cash outflow)                         $10,000               $10,000               $10,000 Cash inflows: 1st year                                             $  1,000                 $9,000                  $  5,000 2nd year   $9,000                 $1,000                   $5,000 3rd year $15,000       - 0 -                    $35,000 a)      Find the payback period for each of the above capital budgeting projects.  Label the payback period for each project so I can see which payback period goes with which project. b)      What two major weaknesses of the payback method are illustrated by...
Payback period. What are the payback periods of projects E and​ F? Assume all the cash...
Payback period. What are the payback periods of projects E and​ F? Assume all the cash flow is evenly spread throughout the year. If the cutoff period is 3 ​years, which​ project(s) do you​accept? Cash Flow E F Cost 36,000   95,000 Cash flow year 1   9,000 9,500 Cash flow year 2   9,000   19,000 Cash flow year 3   9,000   28,500 Cash flow year 4   9,000   38,000 Cash flow year 5   9,000   0 Cash flow year 6   9,000   0
2. A project has the following cash flows             C0                    C1    &n
2. A project has the following cash flows             C0                    C1                    C2                    C3                                       ($1000)             $300                $400                $600 What is the project’s payback period? Year 0 1 2 3 Cash Flow ($1000) $300 $400 $600 Cumulative ($1000) ($700) ($300) 300 a. Calculate the projects NPV at 10%. b. Calculate the project’s PI at 10%. c. Calculate an IRR for the project in question 2 How would you answer a,b, and c in excel? I am getting...