(c) A project manager is relegated to a venture ahead of schedule in the venture lifecycle. Something that must be done is to do a justification for the project. Since very little information is known about the project, the estimates are considered to be rough estimates. The accompanying table is the project manager's gauge of the income that will occur throughout the following five years: Cash Flow End of Year Cash Flow 1 0 2 300,000 3 400,000 4 5 100,000 50,000 (500,000) (90,000) (100,000) (175,000) (35,000) i) What is the payback period for this project? [4 marks] ii) What is the net cash flow at the end of five years? [2 marks] iii) If the net present value for each of the cash flows were calculated at a 10% interest rate, compare the net present value cash flow versus the total cash flow without the net present value applied at the end of five years [4 marks]
(c) A project manager is relegated to a venture ahead of schedule in the venture lifecycle. Something that must be done is to do a justification for the project. Since very little information is known about the project, the estimates are considered to be rough estimates. The accompanying table is the project manager's gauge of the income that will occur throughout the following five years: Cash Flow End of Year Cash Flow 1 0 2 300,000 3 400,000 4 5 100,000 50,000 (500,000) (90,000) (100,000) (175,000) (35,000) i) What is the payback period for this project? [4 marks] ii) What is the net cash flow at the end of five years? [2 marks] iii) If the net present value for each of the cash flows were calculated at a 10% interest rate, compare the net present value cash flow versus the total cash flow without the net present value applied at the end of five years [4 marks]
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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![(c) A project manager is relegated to a venture ahead of schedule in the venture lifecycle. Something
that must be done is to do a justification for the project. Since very little information is known
about the project, the estimates are considered to be rough estimates. The accompanying table is
the project manager's gauge of the income that will occur throughout the following five years:
Cash Flow
End of Year
Cash Flow
1
0
2
300,000
3
400,000
4
5
100,000
50,000
(500,000)
(90,000)
(100,000)
(175,000)
(35,000)
i) What is the payback period for this project? [4 marks]
ii) What is the net cash flow at the end of five years? [2 marks]
iii) If the net present value for each of the cash flows were calculated at a 10% interest rate,
compare the net present value cash flow versus the total cash flow without the net present
value applied at the end of five years [4 marks]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F01c28fc0-15c7-4832-944d-62af085d12a7%2F098c9bd1-016e-480b-81d1-42dc48258dd9%2Fgkramf4_processed.jpeg&w=3840&q=75)
Transcribed Image Text:(c) A project manager is relegated to a venture ahead of schedule in the venture lifecycle. Something
that must be done is to do a justification for the project. Since very little information is known
about the project, the estimates are considered to be rough estimates. The accompanying table is
the project manager's gauge of the income that will occur throughout the following five years:
Cash Flow
End of Year
Cash Flow
1
0
2
300,000
3
400,000
4
5
100,000
50,000
(500,000)
(90,000)
(100,000)
(175,000)
(35,000)
i) What is the payback period for this project? [4 marks]
ii) What is the net cash flow at the end of five years? [2 marks]
iii) If the net present value for each of the cash flows were calculated at a 10% interest rate,
compare the net present value cash flow versus the total cash flow without the net present
value applied at the end of five years [4 marks]
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