Question

Q1.) What is the payback period for the following set of cash flows?

Year Cashflow

0 -$3900

1 1500

2 1400

3 1800

4 1800

Q2.)

An investment project costs $14,400 and has annual cash flows of $4,200 for six years. What is the discounted payback period if the discount rate is 5 percent?

Q3.)A project has projected cash flows of –$28,800, $10,400, $13,100, $15,000, $12,100 and –$8,600 for years 0 to 5, respectively. Should this project be accepted based on the modified internal rate of return if interest rate is 15 percent? Why or why not?

Q4.)

Year Cash Flow (X) Cash Flow (Y)

0 -$20,600 -$20,600

1 8,900 10,200

2 9,200 7,850

3 8,850 8,750

(a) Calculate the IRR for each project

(b) What is the crossover rate for these two projects?

(c) What is the NPV of Projects X and Y at discount rates of 4%, 15%, and 25%?

(d) Draw both NPV profiles on the same graph and interpret your results

2

3

4

Answer #1

1.Statement showing cummulative cash flow

Year |
Cash
flows($) |
Cummulative cash
flows($) |

0 | -3900 | -3900 |

1 | 1500 | -2400 |

2 |
1400 |
-1000 |

3 |
1800 |
800 |

4 | 1800 | 2600 |

**Payback period=A+(B/C)**

Where,

A=it is the last period (year) number with a negative cummulative cash flows

B=It is the the value without negative of cummulative net cash flow at the end of period A

C=It is the total cash inflow at the during the period following period A

Thus,Payback period

=2+(1000/1800)

=2+.5555

=**2.56**

**Thus payback period is 2.56 period**

1.
What is the payback period for the following set of cash
flows?
Year
Cash Flow
0
−$ 8,000
1
2,800
2
1,000
3
2,900
4
2,100
Multiple Choice
3.57 years
3.80 years
3.64 years
3.92 years
3.62 years
2.
An investment project provides cash inflows of $650 per year
for 8 years.
a. What is the project payback period if the
initial cost is $3,250?
b. What is the project payback period if...

What is the payback period for the following set of cash flows?
Year Cash Flow 0 −$ 4,300 1 2,000 2 1,800 3 2,000 4 2,200

What is the payback period for the following set of cash
flows?
Year
Cash Flow
0
$ -5,800
1
2,600
2
1,300
3
1,400
4
2,500

What is the payback period for the following set of cash
flows?
Year
Cash Flow
0
−$ 2,400
1
1,300
2
1,300
3
1,600
4
2,300
1.85 years
2.15 years
1.87 years
1.80 years
1.94 years

What is the payback period for the following set of cash
flows?
Year
Cash flow
0
-$40,000 (it is minus!)
1
$10,000
2
$5,000
3
$20,000
4
$5,000
5
$10,000
A.
2 years
B.
4 years
C.
3 years
D.
1 year
E.
5 years

Find the discounted payback period for the following cash
flows.
Year
Cash Flow
0
-319,000
1
122,000
2
133,000
3
135,000
4
395,000
Assume a discount rate of 13%.
Round your answer to two decimal places.

23
There is a project with the following cash flows :
Year
Cash Flow
0
−$29,000
1
8,500
2
8,450
3
7,850
4
6,600
What is the payback period?
Multiple Choice
3.93 years
3.64 years
4.00 years
2.46 years
3.86 years

(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

You are considering a project
with the following set of cash flows:
Cash
flow
0
-5,500
1
2,000
2
3,000
3
1,000
4
2,000
a. What is
the payback period of this project? If the
pre-specified cut off is 3 years,
should this project be accepted?
b. What is
the discounted
payback period of this
project? If the
pre-specified cut off is 3 years, should this project be
accepted? The discount rate is
10%.

What is the payback period for the following set of cash
flows?
(Round answer to two decomals, i.e. 32.16)
Period
Cash Flow
0
-6700
1
2200
2
3800
3
2600
4
4000

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