A project manager wants to invest in a project with an initial cost of $58,500 and cash flows of $32,400 and $38,500 in Years 1 and 2. The manager's employer requires a discount rate of 10 percent and also a return of $1.10 in today's dollars for every $1 invested. Will the project be approved? Why or why not? 1-No; because the project does not meet either requirement. 2-Yes; because both criteria are met. 3-Yes; because the Pl is greater than 1. 4-Yes; because the NPV is positive. 5-No; while the project returns more than 10 percent it does meet the $1.10 per $1 requirement.

A project manager wants to invest in a project with an initial cost of $58,500 and cash flows of $32,400 and $38,500 in Years 1 and 2. The manager's employer requires a discount rate of 10 percent and also a return of $1.10 in today's dollars for every $1 invested. Will the project be approved? Why or why not? 1-No; because the project does not meet either requirement. 2-Yes; because both criteria are met. 3-Yes; because the Pl is greater than 1. 4-Yes; because the NPV is positive. 5-No; while the project returns more than 10 percent it does meet the $1.10 per $1 requirement.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 12E: Refer to Exercise 19.11. 1. Compute the payback period for each project. Assume that the manager of...

See similar textbooks

Similar questions

None
Suppose that you could invest in the following projects but have only $29,700 to invest. How would you make your decision and in which projects would you invest? Project Cost A $7,850 B C D 11,060 9,200 6,540 NPV $3,200 6,460 4,150 3,090 You should invest in project(s)
Suppose that you could invest in the following projects but have only $29,670 to invest. How would you make your decision and in which projects would you invest? Project Cost NPV A $8,260 $4,300 BCD 10,850 6,470 9,070 4,830 7,170 3,940 You should invest in project(s) E
Required a. List two benefits and two limitations of using the payback method to choosebetween projects? b. Calculate the payback period for each of the three projects.Ignore income taxes. Using the payback method, which projects shouldMcGloire choose and why?
Your Question : Please introduction and correct and incorrect option explain!
Give me correct answer with explanation..j
Please do not provide solution in image format and give proper explanation.
The Weiland Computer Corporation is trying to choose between the following mutually exclusive design projects, P1 and P2: Year 0 1 2 3 Cash flows (P1) -$53,000 27,000 27,000 27,000 Cash flow (P2) -$16,000 9,100 9,100 9,100 If the discount rate is 10 percent and the company applies the profitability index (PI) decision rule, which project should the firm accept? If the firm applies the Net Present Value (NPV) decision rule, which project should it take? Are your answers in (a) and (b) different? Explain why?
Consider a project with the following cash flows: Year 0 -1000 Year 1 1000 Year 2 1000 Year 3 -800 Project D The cash flows are negative in the last period because of decommissioning costs. i.) Write an equation that a good calculator or computer might be able to solve to calculate the IRR (but do not solve it). ii.) Two of your associates have gotten into a fist-fight over the IRR of the project in (i). One claims it is 29.519270%, way above the relevant cost of capital, so that the company should take the project. The other claims it is -34.793795%, way below the relevant cost of capital, so the company should reject the project. What happens when you plug these values into your equation from (i)? Is one of the associates right? What does this imply about the IRR rule?
A firm evaluates all its projects by applying the IRR rule. the current proposed project has a cash flow of negative 37,048 dollars, 16,850 15,700 and 19,300 for years zero to three, respectfully. The required return is 18%. what is the project IRR? should the products be accepted or rejected?
Los Pollos Hermanos is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. Your boss, Gus Fring, asks you which project will have the higher NPV. What do you respond? Year CFs CFL 2 -$1,100 $600 $500 -$1,100 $100 $300 3 $300 $500 OI cannot answer this question without the cost of capital O Project L Project S O The NPVs will be equal $100 $600
Pat's Place is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's IRR can be less than the cost of capital (and even negative), in which case it will be rejected. Year 0 1 2 3 4 5 Cash flows −$9,500 $2,000 $2,025 $2,050 $2,075 $2,100 Group of answer choices