Bahwan Company is considering a new product line to supplement its range line. It is anticipated that the new product line will involve cash investments of $40,000 at time 0 and $50,000 in year 1. After-tax cash flows of $35,000 are expected in year 2, $45,000 in year 3, $35,000 in year 4. If the required rate of return is 16%, a) what is the net present value of the project? Is it acceptable? b) What is the project's payback period? Select one: a. None of the other three answers b. NPV= 8932, Acceptable, Pay back = 2 years c. NPV=-8932, Not acceptable, Pay back = 27.4 months d. NPV=-8932, Not Acceptable, Pay back = 2 years
Bahwan Company is considering a new product line to supplement its range line. It is anticipated that the new product line will involve cash investments of $40,000 at time 0 and $50,000 in year 1. After-tax cash flows of $35,000 are expected in year 2, $45,000 in year 3, $35,000 in year 4. If the required rate of return is 16%, a) what is the net present value of the project? Is it acceptable? b) What is the project's payback period? Select one: a. None of the other three answers b. NPV= 8932, Acceptable, Pay back = 2 years c. NPV=-8932, Not acceptable, Pay back = 27.4 months d. NPV=-8932, Not Acceptable, Pay back = 2 years
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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Bahwan Company is considering a new product line to supplement its range line. It is anticipated that the new product line will involve cash investments of $40,000 at time 0 and $50,000 in year 1. After-tax cash flows of $35,000 are expected in year 2, $45,000 in year 3, $35,000 in year 4. If the required
Select one:
a. None of the other three answers
b. NPV= 8932, Acceptable, Pay back = 2 years
c. NPV=-8932, Not acceptable, Pay back = 27.4 months
d. NPV=-8932, Not Acceptable, Pay back = 2 years
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