A company is considering two projects. Project A Project B Initial investment $200,000 $200,000 Cash inflow Year 1 $60,000 $90,000 Cash inflow Year 2 $60,000 $90,000 Cash inflow Year 3 $60,000 $40,000 Cash inflow Year 4 $60,000 $50,000 Cash inflow Year 5 $60,000 $70,000 What is the payback period for Project B? 02 years 2.5 years 03.5 years 04 years

A company is considering two projects. Project A Project B Initial investment $200,000 $200,000 Cash inflow Year 1 $60,000 $90,000 Cash inflow Year 2 $60,000 $90,000 Cash inflow Year 3 $60,000 $40,000 Cash inflow Year 4 $60,000 $50,000 Cash inflow Year 5 $60,000 $70,000 What is the payback period for Project B? 02 years 2.5 years 03.5 years 04 years

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

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You have been offered a project paying $300 at the beginning of each year for the next 20 years. What is the maximum amount of money you would invest in this project if you require 9 percent rate of return to your investment? OA. $2,739 B. $2,985 C. $15,348 OD. $16,729
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
Cash Payback Period A project has estimated annual net cash flows of $39,500. It is estimated to cost $158,000. Determine the cash payback period. Round your answer to one decimal place.fill in the blank 1 years
a project estimated initial cost is $170,000. The project is expected to generate the following cashflows for the first 7 years. Years Net cashflows $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 If the company is MARR is 12%, using NPW/NFW analysis is the project profitable?
IRR A project has an initial cost of $55,000, expected net cash inflows of $11,000 per year for 10 years, and a cost of capital of 10%. What is the project's IRR? Round your answer to two decimal places. %
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
The cash flow of an energy management opportunity is estimated as follows: Initial cost:$12,000 Energy saving:$2,700/year for 12 years Maintenance cost:$1,200/year for 12 years Salvage value:$2,500@the end of 12 years If the interest rate is 10%, 1) What is the simple payback period (SPP) (in years)? (a)5.2 (b)4.2 (c)4.6 (d)8.02) With an annual discount rate is 10%, what is the discounted payback period (in years)? (a)9.5 b) 15.1 (c)8.1 (d) 16.9 (e) 6.53)With an annual discount rate is 10%, what is the benefit-cost ratio (BCR)? (Hint: Benefit = Annual saving-Maintenance; Cost= Initial investment - Salvage)(a) 1.04(b) 0.80(c) 1.25(d) 1.12(e) 1.43
Calculate the IRR for the picture enclosed
A proposed project is expected to increase accounts receivable by $25,000, decrease inventory by $8,000 and increase accounts payable by $16,000. What is the project's initial requirement for net working capital? Select one: a. +$17,000 b. $1000 c. -$9,000 d. +$9,000
IRR A project has an initial cost of $45,000, expected net cash inflows of $10,000 per year for 8 years, and a cost of capital of 10%. What is the project's IRR? Round your answer to two decimal places. %
Imagine a project with the initial investment of $35,000. The project is expected to last 10 years, with the discount rate of 8.80% and the annual (cash flow) growth rate of 1.20%. If the first year CF is $8,850, what is the NPV of this project? $27,000 $25,000 $26,000 $27,500 $26,500
Snowflake Resorts is considering investing in a project that has a net investment of $240,000. This project will return positive net cash flows annually for the next 5 years of $80,000 per year. Snowflake Resorts requires a 12% return on all of its investments. The payback period of this investment is ________ years 5 3 4 2 The net present value of this project is $65,355 $48,384 $85,652 $57,635 The profitability index of this project is 2016 5924 7350 3852 When projects have scale differences, only the Net Present Value method will rank the projects correctly True False Fees paid to investment bankers and lawyers for issuing securities are called Component costs Issuance costs Security costs Licensing costs Purposes for considering a capital project may include which of the following Cost reductions Growth projects Government required projects All of the above When the weighted average cost of capital for a project is considered on an after tax…

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