A project that costs $3,100 to install will provide annual cash flows of $660 for the next 6 years. The firm accepts projects w payback periods of less than 5 years. a. What is this project's payback period? (Round your answer to 3 decimal places.) b. Will the project be accepted? c-1. What is project NPV if the discount rate is 2%? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.) c-2. Should this project be pursued? d-1. What is project NPV if the discount rate is 12%? (Negative amount should be indicated by a minus sign. Do not roune intermediate calculations. Round your answer to 2 decimal places.) d-2. Should this project be pursued? e. Will the firm's decision change as the discount rate changes? a. Payback period Years b. Will the project be accepted? c-1. NPV of the project if the discount rate is 2% C-2. Should this project be pursued? d-1. NPV of the project if the discount rate is 12% d-2. Should this project be pursued? e. Will the firm's decision change as the discount rate changes?
A project that costs $3,100 to install will provide annual cash flows of $660 for the next 6 years. The firm accepts projects w payback periods of less than 5 years. a. What is this project's payback period? (Round your answer to 3 decimal places.) b. Will the project be accepted? c-1. What is project NPV if the discount rate is 2%? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.) c-2. Should this project be pursued? d-1. What is project NPV if the discount rate is 12%? (Negative amount should be indicated by a minus sign. Do not roune intermediate calculations. Round your answer to 2 decimal places.) d-2. Should this project be pursued? e. Will the firm's decision change as the discount rate changes? a. Payback period Years b. Will the project be accepted? c-1. NPV of the project if the discount rate is 2% C-2. Should this project be pursued? d-1. NPV of the project if the discount rate is 12% d-2. Should this project be pursued? e. Will the firm's decision change as the discount rate changes?
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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Transcribed Image Text:A project that costs $3,100 to install will provide annual cash flows of $660 for the next 6 years. The firm accepts projects with
payback periods of less than 5 years.
a. What is this project's payback period? (Round your answer to 3 decimal places.)
b. Will the project be accepted?
c-1. What is project NPV if the discount rate is 2%? (Negative amount should be indicated by a minus sign. Do not round
intermediate calculations. Round your answer to 2 decimal places.)
c-2 Should this project be pursued?
d-1. What is project NPV if the discount rate is 12%? (Negative amount should be indicated by a minus sign. Do not round
intermediate calculations. Round your answer to 2 decimal places.)
d-2. Should this project be pursued?
e. Will the firm's decision change as the discount rate changes?
Payback period
Years
a.
b.
Will the project be accepted?
c-1.
NPV of the project if the discount rate is 2%
C-2.
Should this project be pursued?
d-1.
NPV of the project if the discount rate is 12%
Should this project be pursued?
Will the firm's decision change as the discount rate changes?
d-2.
e.
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