a-1. What is the payback period on each project? (Do not round intermediate calculations. Round your answers to the nearest whole number.) Payback Period Project A years Project B Project C years years a-2. What is the discounted payback period on each project? (Do not round intermediate calculations. Round your answers to 2 decimal places. If any of the projects does not pay back on a discounted basis, enter zero ("O").)

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
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b. Given that you wish to use the payback rule with a cutoff period of 2 years, which projects would you accept?
c. If you use a cutoff period of 3 years with the discounted payback rule, which projects would you accept?
d. Which projects have positive NPVS?
Transcribed Image Text:b. Given that you wish to use the payback rule with a cutoff period of 2 years, which projects would you accept? c. If you use a cutoff period of 3 years with the discounted payback rule, which projects would you accept? d. Which projects have positive NPVS?
A firm is considering the following projects. Its opportunity cost of capital is 11%.
Cash Flows, $
Project
Time:
1
2
3
4
-6, 900
-2, 900
-6, 900
+3, 950
+2, 950
+3, 950
A
+1, 475
+1, 475
+2, 900
+3, 950
+1, 475
+1, 475
+6, 900
a-1. What is the payback period on each project? (Do not round intermediate calculations. Round your answers to the nearest whole
number.)
Payback Period
Project A
Project B
Project C
years
years
years
a-2. What is the discounted payback period on each project? (Do not round intermediate calculations. Round your answers to 2
decimal places. If any of the projects does not pay back on a discounted basis, enter zero ("O").)
Discounted Payback Period
Project A
years
Project B
Project C
years
years
Transcribed Image Text:A firm is considering the following projects. Its opportunity cost of capital is 11%. Cash Flows, $ Project Time: 1 2 3 4 -6, 900 -2, 900 -6, 900 +3, 950 +2, 950 +3, 950 A +1, 475 +1, 475 +2, 900 +3, 950 +1, 475 +1, 475 +6, 900 a-1. What is the payback period on each project? (Do not round intermediate calculations. Round your answers to the nearest whole number.) Payback Period Project A Project B Project C years years years a-2. What is the discounted payback period on each project? (Do not round intermediate calculations. Round your answers to 2 decimal places. If any of the projects does not pay back on a discounted basis, enter zero ("O").) Discounted Payback Period Project A years Project B Project C years years
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