Question

Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistic for the project are three and three and a half years, respectively. .

Time 0 1 2 3 4 5

Cash Flow -100,000 30,000 45,000 55,000 30,000 10,000

Use the IRR decision rule to evaluate this project; should it be accepted or rejected and why?

Answer #1

Suppose your firm is considering investing in a project with the
cash flows shown as follows, that the required rate of return on
projects of this risk class is 8 percent, and that the maximum
allowable payback and discounted payback statistic for the project
are three and three and a half years, respectively
Time
0
1
2
3
4
5
Cash
Flow
-100,000
30,000
45,000
55,000
30,000
10,000
Calculate the payback and use the payback decision rule...

4. Suppose your firm is considering investing in a
project with the cash flows shown as follows, that the required
rate of return on projects of this risk class is 8 percent, and
that the maximum allowable payback and discounted payback statistic
for the project are two and two and .25 years respectively.
Time Years 0
1 2 3 4
5 6
Cash Flow -150,000 30,000
50,000 45,000 25000 35000
10000
Use the payback decision rule to evaluate...

Suppose your firm is considering investing in a project with the
cash flows shown as follows, that the required rate of return on
projects of this risk class is 10 percent, and that the maximum
allowable payback and discounted payback statistics for the project
are three and a half and four and a half years, respectively. Use
the IRR decision to evaluate this project; should it be accepted or
rejected?
Time
0
1
2
3
4
5
6
Cash Flow...

Suppose your firm is considering investing in a project with the
cash flows shown below, that the required rate of return on
projects of this risk class is 10 percent, and that the maximum
allowable payback and discounted payback statistics for your
company are 3.0 and 3.5 years, respectively.
Time:
0
1
2
3
4
5
Cash flow:
–$243,000
$66,600
$84,800
$141,800
$122,800
$82,000
Use the IRR decision rule to evaluate this project. (Do
not round intermediate calculations and round...

Suppose your firm is considering investing in a project with the
cash flows shown below, that the required rate of return on
projects of this risk class is 11 percent, and that the maximum
allowable payback and discounted payback statistics for your
company are 3 and 3.5 years, respectively. Time: 0 1 2 3 4 5 Cash
flow –$235,000 $65,800 $84,000 $141,000 $122,000 $81,200 Use the
IRR decision rule to evaluate this project. (Do not round
intermediate calculations and round...

Suppose your firm is considering investing in a project with the
cash flows shown below, that the required rate of return on
projects of this risk class is 12 percent, and that the maximum
allowable payback and discounted payback statistic for the project
are 2 and 3 years, respectively. Time 0 1 2 3 4 5 6 Cash Flow
-1,100 80 520 720 720 320 720 Use the discounted payback decision
rule to evaluate this project; should it be accepted...

Suppose your firm is
considering investing in a project with the cash flows shown below,
that the required rate of return on projects of this risk class is
7 percent, and that the maximum allowable payback and discounted
payback statistics for the project are 3.5 and 4.5 years,
respectively.
Time:
0
1
2
3
4
5
6
Cash flow:
−$5,100
$1,240
$2,440
$1,640
$1,560
$1,440
$1,240
Use the payback decision rule to evaluate this project.
(Round your answer to 2...

Suppose your firm is considering investing in a project with the
cash flows shown below, that the required rate of return on
projects of this risk class is 12 percent, and that the maximum
allowable payback and discounted payback statistic for the project
are 2 and 3 years, respectively.
Time
0
1
2
3
4
5
6
Cash Flow
-1,030
130
470
670
670
270
670
Use the payback decision rule to evaluate this project; should it
be accepted or...

Suppose your firm is considering investing in a project with the
cash flows shown below, that the required rate of return on
projects of this risk class is 7 percent, and that the maximum
allowable payback and discounted payback statistics for the project
are 2.5 and 3.5 years, respectively.
Time:
0
1
2
3
4
5
6
Cash flow
–$4,700
$1,170
$2,370
$1,570
$1,570
$1,370
$1,170
Use the payback decision rule to evaluate this project.
(Round your answer...

Suppose your firm is considering investing in a project with the
cash flows shown below, that the required rate of return on
projects of this risk class is 12 percent, and that the maximum
allowable payback and discounted payback statistic for the project
are 2 and 3 years, respectively.
Time
0
1
2
3
4
5
6
Cash Flow
-980
180
420
620
620
220
620
Use the NPV decision rule to evaluate this project; should it be
accepted or...

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