egardalast Company uses a 12% hurdle rate for all capital expenditures. Based on company policy, only projects that have a discounted payback of 3 years or less are acceptable. It has lined up four projects with the following information.   A B C D Initial cash outflow 400,000 596,000 496,000 544,000 Annual cash inflows         Year 1 130,000 200,000 160,000 190,000 2 140,000 270,000 190,000 250,000 3   180,000 180,000 180,000 4   130,000 160,000 120,000 If the company has a capital budget of P1,500,000, what project/s should be pursued based on the discounted payback period? Show necessary computations on your solution.

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
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Legardalast Company uses a 12% hurdle rate for all capital expenditures. Based on company policy, only projects that have a discounted payback of 3 years or less are acceptable. It has lined up four projects with the following information.

 

A

B

C

D

Initial cash outflow

400,000

596,000

496,000

544,000

Annual cash inflows

 

 

 

 

Year 1

130,000

200,000

160,000

190,000

2

140,000

270,000

190,000

250,000

3

 

180,000

180,000

180,000

4

 

130,000

160,000

120,000

If the company has a capital budget of P1,500,000, what project/s should be pursued based on the discounted payback period? Show necessary computations on your solution.

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