BioInov could lunch two new products onto the market. The expected cash flows and investments are represented in the table below. Assume that the required return in either investment is 6%. Year Nano tests micro kits intitial investments -11,000 -11,000 Year 1 2,000 4,000 Year 2 3,000 4,000 Year 3 4,000 4,000 Year 4 5,000 4,000 Year 5 6,000 4,000 A) Compute the payback period for each project. If the company requires at most three years to recover the initial investment, should we accept either or both projects? B) . Compute the discounted payback period for each project. If the company requires at most three years to recover the initial investment, should we accept either or both projects? C) Compute the NPV for each project. Should we accept either or both projects? D) Compute the IRR for each project. Should we accept either or both projects? E If the projects are mutually exclusive (the company can only lunch one of the products), which should we choose?
BioInov could lunch two new products onto the market. The expected cash flows and investments are represented in the table below. Assume that the required
| Year | Nano tests | micro kits |
| intitial investments | -11,000 | -11,000 |
| Year 1 | 2,000 | 4,000 |
| Year 2 | 3,000 | 4,000 |
| Year 3 | 4,000 | 4,000 |
| Year 4 | 5,000 | 4,000 |
| Year 5 | 6,000 | 4,000 |
A) Compute the payback period for each project. If the company requires at most three years
to recover the initial investment, should we accept either or both projects?
B) . Compute the discounted payback period for each project. If the company requires at most
three years to recover the initial investment, should we accept either or both projects?
C) Compute the
D) Compute the
E If the projects are mutually exclusive (the company can only lunch one of the products),
which should we choose?
Hi! Thank you for the question, As per the honor code, we are allowed to answer three sub-parts at a time so we are answering the first three as you have not mentioned which of these you are looking for. Please re-submit the question separately for the remaining sub-parts.
Given Data:
| Year | Nano tests | micro kits |
| intitial investments | -11,000 | -11,000 |
| Year 1 | 2,000 | 4,000 |
| Year 2 | 3,000 | 4,000 |
| Year 3 | 4,000 | 4,000 |
| Year 4 | 5,000 | 4,000 |
| Year 5 | 6,000 | 4,000 |
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 10 images
