c. If you use a cutoff period of 3 years with the discounted payback rule, which projectswould you accept?d. Which projects have positive NPVs?e. "Payback gives too much weight to cash flows that occur after the cutoff date." True orfalse? A firm is considering the following projects. Its opportunity cost of capital is 9%.Cash Flows, $23+1,050 +3,10000 +1,200 +2,100 +3,100-5,200 +1,050 +1,050 +3,100 +5,200Project Time:Aa-1. What is the payback period on each project? (Do not round intermediatecalculations. Round your answers to the nearest whole number.)Project AProject BProject C1-5,200 +1,050-1,200Project AProject BProject CPayback Periodyearsyearsyearsa-2. What is the discounted payback period on each project? (Do not roundintermediate calculations. Round your answers to 2 decimal places. If any of theprojects does not pay back on a discounted basis, enter zero ("0").)Discounted Payback Periodyearsyearsyearsb. Given that you wish to use the payback rule with a cutoff period of 2 years, whichprojects would you accept?

“Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

A firm is considering the following projects. Its opportunity cost of capital is 9%. Cash Flows, $ 1 2 3 -5,200 +1,050 +1,050 +3,100 Project Time: A B с -1,200 0 +1,200 +2,100 +3,100 -5,200 +1,050 +1,050 +3,100 +5,200

A firm is considering the following projects. Its opportunity cost of capital is 9%. Cash Flows, $ 1 2 3 -5,200 +1,050 +1,050 +3,100 Project Time: A B с -1,200 0 +1,200 +2,100 +3,100 -5,200 +1,050 +1,050 +3,100 +5,200

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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Question

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?
e. "Payback gives too much weight to cash flows that occur after the cutoff date." True or
false?

A firm is considering the following projects. Its opportunity cost of capital is 9%.
Cash Flows, $
2
3
+1,050 +3,100
0
0 +1,200 +2,100 +3,100
-5,200 +1,050 +1,050 +3,100 +5,200
Project Time:
A
a-1. What is the payback period on each project? (Do not round intermediate
calculations. Round your answers to the nearest whole number.)
Project A
Project B
Project C
1
-5,200 +1,050
-1,200
Project A
Project B
Project C
Payback Period
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 ("0").)
Discounted Payback Period
years
years
years
b. Given that you wish to use the payback rule with a cutoff period of 2 years, which
projects would you accept?

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