b) What is the payback period on each of the following projects?Cash Flow in DollarsProjectTime 01A-5,000+1,000+1,000+3,000-1,000-5,000B+1,000+2,000+3,000C+1,000+1,000+3,000+5,00041) Given that you wish to use the payback rule with cut off period of 2 years,which project will you accept?Head2) If you use a cut off period of 3 years, which projects would you accept?3) If the opportunity cost of capital is 10%, which projects have positiveNPVS?4) "Payback gives too much weight to cash flows that occur after the cutoffdate" – Do you agree with this statement. Please explain in short.lictions: OnPsDELL

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b) What is the payback period on each of the following projects? Cash Flow in Dollars Project Time 0 1 3 A -5,000 +1,000 +1,000 +1,000 +3,000 B -1,000 +2,000 +3,000 C -5,000 +1,000 +1,000 +3,000 +5,000 4 1) Given that you wish to use the payback rule with cut off period of 2 years, which project will you accept? Hea 2) If you use a cut off period of 3 years, which projects would you accept? 3) If the opportunity cost of capital is 10%, which projects have positive NPVS?

b) What is the payback period on each of the following projects? Cash Flow in Dollars Project Time 0 1 3 A -5,000 +1,000 +1,000 +1,000 +3,000 B -1,000 +2,000 +3,000 C -5,000 +1,000 +1,000 +3,000 +5,000 4 1) Given that you wish to use the payback rule with cut off period of 2 years, which project will you accept? Hea 2) If you use a cut off period of 3 years, which projects would you accept? 3) If the opportunity cost of capital is 10%, which projects have positive NPVS?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 11MC: In an unrelated analysis, you have the opportunity to choose between the following two mutually...

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(question 3 a,b) a) Calculate the payback period for each project. The maximum allowable payback period setby the company for all projects is 3 years. b) Calculate the net present value (NPV) for each project
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