1/ Smart company invests 10,000 $ in development Project (B) and expect to generate net cash inflows each year as following: Years Project B 10,000 5,000 2,500 4,000 1,000 1 4 Calculate the payback period for the project?

1/ Smart company invests 10,000 $ in development Project (B) and expect to generate net cash inflows each year as following: Years Project B 10,000 5,000 2,500 4,000 1,000 1 4 Calculate the payback period for the project?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Related questions

Q: Flora Company has recorded the following cash flows at the end of each year for a project. If the…

A: Present value: It can be defined as today’s worth of an investment that will be received in the…

Q: The following are the cash flows of two projects: Year Project A 0 $ (340) Project B $ (340) 1 170…

A: Payback period is the duration of time in which the initial investment is recovered by the cash…

Q: Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 8 -$…

A: The problem involves the different capital budgeting techniques used by investors to evaluate or…

Q: 5. It is estimated that an investment in a new process will cause the following cash flow in…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Park Company is considering an investment of $31,500 that provides net cash flows of $13,200…

A: The payback period represents the time period taken by the business to recover its investment. The…

Q: The cash flows (CFs) of project A which you are considering to invest are given below. If the cost…

A: Net Present value is the sum of present value of future cashflows

Q: An investment is expected to produce the following annual year-end cash flows: Year 1 Year 2 Year 3…

A: Initial cost-$13,700YearCash flow1$5,000.002$1,127.003$0.004$5,240.005$6,240.006$1,363.40

Q: Required: A project has estimated annual net cash flows of $64,000 and is estimated to cost…

A: Payback Period :— It is the time period required to recover all its initial investment or cash…

Q: What is the payback period for a project with an initial investment of $180,000 that provides an…

A: Payback period is the period required to recover initial investment of project and but do not…

Q: . Calculate the annual and present worth of the project.

A: Present Worth: Present worth or Net present value (NPV) refers to the difference between the value…

Q: what is its initial cash outlay?

A: The payback period is one of the measures which has been used by the company in the project…

Q: Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 -$420,000…

A: The payback period is how long it takes to recover an investment's initial cost. NPV compares…

Q: An investment project provides cash inflows of $1325 per year for eight yea payback period if the…

A: Year cash flow 1 1 1,325.00 2…

Q: Given the following end of year cash flows (CF), estimate the internal rate of return (IRR) of this…

A: Step 1: Given Value for Calculation Cost of Capital = 10%Cash Flow for Year 0 = cf0 = 0Cash Flow…

Q: 2. A project has a period of payback as 3 years, with an initial investment of $80,000 Year Cash…

A: If cash flows are uneven: Payback Period = Year before full recovery of initial investment +…

Q: 2.) Cash flows for two different investment projects are given in the Chart. Cash flows for two…

A: The net present value is the present value of the project's cash flows less the initial costs.

Q: Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 -$…

Q: MMC Company wants to install the recycle plant that cost $80,000 with 10% cost of capital. Year 0 1…

A: The discounted payback period is used to calculate the profitability and timing of cash inflows of a…

Q: A project is expected to generate the following cash flow stream. The required rate of returns is 9…

A: Solution:- Present value means the value of cash flows in today's terms by discounting the same at…

Q: A company is considering two projects. Project I Project II Initial investment $200,000 $200,000…

A: The payback period can be calculated as the number of years it will take for a project to recover…

Q: ome is $75,000? a. 7 b. 8 c. 5 d. 9 e. 6

A: Payback period is period required to recover initial investment.

Q: Problem -1-: Here are the projected cash inflows from a proposed investment: Years 1 2 3 4…

A: Payback Period = Years before full recovery + (unrecovered cost at the start of the year/ cashflow…

Q: Porter Company is analyzing two potential investments Project X $ 75,900 Initial investment Net cash…

A: Payback period = Initial investment/Annual cash inflows

Q: Poder Inc. is considering a project that has the following cash flow data. What is the project's…

A: To calculate the payback period for the project, we need to determine the time it will take for the…

Q: Calculate the Equivalent X(4) for a project with the following cash flows: First Cost (F.C) = JD…

A: Cash Flows: Year Cash Flow Reference 0 -13000 First Cost 1 -3000 Operating Cost 2 -3000…

Q: 7A- What is the rate of return associated with this project? 9 Year Cash Flow 0 -$225,000 1 85,000 2…

A: Answer image:For the given Cash Flow pattern, the following solution can be found through excel:The…

Q: Assume a $50,000 investment and the following cash flowa for two aleternatives.. Year…

A: given, year A B 0 -50000 -50000 1 10000 20000 2 11000 25000 3 13000 15000 4 16000 0 5…

Q: a) Given the following cashflows for Project Omega, what is the payback period in years assuming the…

A: The payback period is used to determine how long it will take an investment to recoup its initial…

Q: Year Cash Flow (A) Cash Flow (D) $- -$ 0 348,000 51,000 1234 47,000 24,200 67,000 22,200 19,700…

Q: Cash flows from two different investment projects: Project / Year 0 1 2 3 Project A -2500 1000 1500…

A: The projects A and B can be valuated using the Net Present value of the project. The Cash flows the…

Q: Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0-$416,000…

A: Net present value (NPV) is the value of all the cash flow of the investment (positive and negative)…

Q: Q3) 3. The company will invest $150,000 in a project and average annual income $50,000. The…

A: Accounting rate of return = Average annual income / Initial investment.

Q: Investment A is expected to generate after-tax cash flows of $5,000 per year for 6 years and will…

A: Cross-over rate is the discount rate at which the Net present value (NPV) of two projects is…

Q: At a required rate of return of 15.0%, Project B's present value is obviously higher than that of…

A: Present value is defined as the current value of an amount or sum of money to be received at some…

Q: Intro A project requires an initial investment of $77.4 million to buy new equipment, and will…

A: The IRR method is used to measure the profitability of a project. It uses the NPV formula but…

Q: 1 3 project/year -2500 1000 1500 1000 Project A Project B -2500 -1000 2500 2000 Calculate the Net…

A: Given:

Q: What is the internal rate of return for a project with the following cash flows? Round off the…

A: IRR stands for "Internal Rate of Return," and it is a financial metric used to evaluate the…

Q: If the cost of a project is $50,000 and the cash inflows are as given in the table below, what is…

A: given cost of project =$50000

Q: You've estimated the following cash flows (in $) for a project: A B 1 Year Cash flow The required…

A: IRR, or internal rate of return, is a metric used in financial analysis to estimate the…

Q: Park Company is considering an investment of $38,000 that provides net cash flows of $13,800…

A: The payback period is a financial metric that measures the time it takes for an investment to…

Q: Using the below informtion answer: 5.1 Payback Period of Project Tan (expressed in years, months…

A: The payback period is a method of finding out the profitability of a project. It calculates the time…

Q: A project requires a $41,000 initial investment and is expected to generate end-of-period annual…

A: Net present value refers to the method of capital budgeting used for estimating the viability of a…

Q: y-Dack p ws for 5

A: Payback period is the time when the investment cost is received in terms of cash flow. It is a…

Q: 3. The company will invest $150,000 in a project and average annual income $50,000. The investment…

A: Formulas:

Q: A project has the following cash in and out flows in its first year: Income generated:…

A: Income Generated = R100,000Cost of sales = R30,000Depreciation = R10,000Tax Rate = 27%

Q: Compute the payback statistic for Project A if the appropriate cost of capital is 7 percent and the…

A: Calculation of Payback Period:The payback period is 2.48 years.The project should be Accepted since…

Question

1/ Smart company invests 10,000 $ in development Project (B) and expect to generate
net cash inflows each year as following:
Years
Project B
10,000
5,000
1
2,500
4,000
1,000
3
4.
Calculate the payback period for the project?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Calculation of payback period

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

1. A project has an initial cost of 40,000. The future cash flows are 5,500, 15,200, -3,600, and 32,000 for year 1 to 4 respectively. How many IRRs will this project have? a. 3 b. 1 c. 4 d. 0
4. Capital expenditure of a new investment project is $ 120,000,000; the expected annualnet cash flows generated from the investment are given below. Supposethat the company's cost of capital is 10%, calculate and comment on the accounting rate of return, internal rate of return, and discounted payback period of the project. Cash flows($000) DE (10%) 40,000 42,000 50,000 Years 1. 0.909 2. 0.826 0.751 52,000 0.683 55,000 0.621 SV 60,000 0.565
1. An investment of $200,000 is expected to generate the following cash inflows in six years: (15) Year 1: $70,000 Year 2: $60,000 Year 3: $55,000 Year 4: $15,000 Year 5: $30,000 Year 6: $25,000 Required: Compute payback period of the investment. Should the investment be made if management wants to recover the initial investment in 3 years or less?
Note: Question 12, 13, 14 and 15 are based on the same two projects A and B. Your firm has estimated the following cash flows for two mutually exclusive capital investment projects. Firm uses 4.9 years as the cutoff for the discounted payback period. The firm's required rate of return is 11%. What is the IRR of project B? Project A Cash Flow Year Project B Cash Flow -$80,000 -$180,000 1 $23,000 $53,000 2 $23,000 $53,000 3 $23,000 $47,000 4 $20,000 $47,000 $20,000 $40,000 6 $20,000 $27,000 O 16.21% 10.55% 13.98% O 13.65% 12.22%
Year Cash Flow (A) Cash Flow (B) 0 −$ 417,000 −$ 36,000 1 48,000 19,600 2 58,000 14,100 3 75,000 14,600 4 532,000 11,400 The required return on these investments is 13 percent. What is the payback period for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. What is the NPV for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. What is the IRR for each project? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. What is the profitability index for each project? Note: Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161. Based on your answers in (a) through (d), which project will you finally choose?
A project requires an investment of $1000 and generates a cash flow of $1000 in 1 year and another $1000 in 5 years. What is the IRR? A. 16.87% B. 25.13% C. 32.47% D. 38.16%
A firm evaluates all of its projects by applying the IRR rule. Year Cash Flow 0 -$ 152,000 1 64,000 2 75,000 3 59,000 a. What is the project's IRR? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. If the required return is 13 percent, should the firm accept the project? % a. Internal rate of return b. Project acceptance
Compute the payback statistic for Project A if the appropriate cost of capital is 8 percent and the maximum allowable payback period is four years. (Round your answer to 2 decimal places.) Project A Time: Cash flow: Payback 0 1 -$1,000 $350 years 2 $480 3 $520 4 $300 5 $100
1. What is the payback period of a project that has \$5 540,000 in initial investment , \$150,000 in annual cash inflows and \$60,000 in annual cash outlfows ? a. 6 years b . 9 years c . 5.4 years d . 3.6 . years e. None of the above
X will pay $80,000 for a project that will generate the following cash flows: YEAR 1 2 3 4 5 7 8 CASH FLOW $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $30,000 $30,000 The payback period for the investment is: O 7 years O 6.25 years O 7 years O 7.33 years
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 −$350,000 −$35,000 1 25,000 17,000 2 70,000 11,000 3 70,000 17,000 4 430,000 11,000 Assume you require a 15 percent return on your investment and a payback of 4 years. a. If you apply the discounted payback criterion, which investment will you choose? Why? b. If you apply the NPV criterion, which investment will you choose? Why? c. Based on your answers in (a) and (b), what you can say anything about the IRR of both projects? which project will you finally choose? Why?
A) Consider the following two mutually exclusive projects: Cash flow (A) -RM300,000 20,000 50,000 50,000 390,000 i) ii) Year 0 1 2 3 4 Cash flow (B) -RM40,000 19,000 12,000 18,000 10,500 If you apply the payback criterion, which investment will you choose if you set the maximum payback period of 3 years? If you apply the internal rate of return (IRR) criterion, which investment will you choose, if you require a 15% return?

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS