A project requires a 1,000,000 investment. Find the payback period if the project is able to generate the following cash flows. (Round to two decimal places.) Year 1: $250,000 Year 2: $200,000 Year 3: $150,000 Year 4: $200,000 Year 5: $335,943

A project requires a 1,000,000 investment. Find the payback period if the project is able to generate the following cash flows. (Round to two decimal places.) Year 1: $250,000 Year 2: $200,000 Year 3: $150,000 Year 4: $200,000 Year 5: $335,943

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

'A project requires a 1,000,000 investment. Find the payback period if the project is able to generate the following cash flows. (Round to two decimal places.)

Year 1: $250,000

Year 2: $200,000

Year 3: $150,000

Year 4: $200,000

Year 5: $335,943

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3) Consider the following two projects: Net Cash Flow Each Period Initial Outlay 1 2 3 4 Project A $4,000,000 $2,003,000 $2,003,000 $2,003,000 $2,003,000 Project B $4,000,000 0 0 0 $11,000,000 Calculate the net present value of each of the above projects, assuming a 14 percent discount rate. What is the internal rate of return for each of the above projects? Compare and explain the conflicting rankings of the NPVs and IRRs obtained in parts a and b above. If 14 percent is the required rate of return, and these projects are independent, what decision should be made? If 14 percent is the required rate of return, and the projects are mutually exclusive, what decision should be made?
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H1. Account
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