Answered: Evaluate the following projects using…

Evaluate the following projects using the payback method assuming a rule of 3 years for payback. Year Project A Project B 0 -10,000 -10,000 1 4,000 4,000 2 4,000 3,000 3 4,000 2,000 4 0 1,000,000

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

See similar textbooks

Related questions

Q: Average Rate of Return The following data are accumulated by Watershed Inc. in evaluating two…

A: Average investment :— It is calculated by dividing sum of initial investment and residual value by…

Q: The following table contains a summary of how a project's balance is expected to change over its 5…

A: Net present value is a method of capital budgeting used to determine the worth of a project in…

Q: Problem I (1.5P) Consider the investment projects in the table below, all of which have a four-year…

A: Step 1: Step 2:

Q: incurred along with operating costs of $250,000 in year one and $350,000 at the end of each year two…

A: Since this question has multi parts .I have solved first three parts for further parts please repost…

Q: Information on four investment proposals is given below: A Investment required Net present value. $…

A: Profitability index = Present value of cash inflows / Initial investmentHigher the profitability…

Q: What is the “cross-over” rate of the following projects? Year…

A: YEAR PROJECT A PROJECT B 0 -800 -1400 1 600 950 2 600 950

Q: Project A has NPV = + $2,000, IRR = 12% and discounted payback period of 3 years. Project B has NPV…

A: The objective of the question is to determine which project should be approved first by the board of…

Q: What is the payback period for a project with an initial investment of $180,000 that provides an…

A: Payback period is the period required to recover initial investment of project and but do not…

Q: Compute for the benefit ratio of the following projects. Project cost 5,000,000 2,000,000 1,000,000…

A: Hi, there, Thanks for posting the question. As per our Q&A honour code, we must answer the first…

Q: 9. A four-year project requires $1,000,000 as the first cost and brings $2,000,000 at the end of the…

A: We can determine the IRR by rearranging the FV formula and solving for r.

Q: 9

A: The objective of the question is to calculate the payback period and Net Present Value (NPV) for two…

Q: Average rate of return The following data are accumulated by Patterson Inc. in evaluating two…

A: AVERAGE RATE OF RETURN The average rate of return refers to the average amount of profit that is…

Q: Project A cost $6,000 and Project B cost $18,000, there expected net cash inflows are shown on the…

A: Net present value is the technique used in capital budgeting to evaluate the acceptability of the…

Q: Whats the paybck period & discounted payback period for a project with costof 2OO,OOO that generates…

A: for payback period there is not need to discount the cash flows Total cash in first 2 years = 30,000…

Q: project requires $ 80,000 end produces a A on Pnitial out lay of return of $20,000 end of year 1 , $…

A: Initial outlay (CF0) = $80,000 Year 1 cash inflow (CF1) = $20,000 Year 2 cash inflow (CF2) = $30,000…

Q: Two pieces of construction equipment are being analyzed.At an 8% interest rate, which alternative…

A: The process through which a business evaluates major projects or alternatives before accepting or…

Q: Which alternative in the table below should be selected when the MARR = 7% per year? The life of…

A: Internal rate of return is the discount rate at which the present value of the future cash flow and…

Q: Question One: a) For the given projects with useful life equal six years. Find best alternative…

A: Net Present Value (NPV) is one of the important concepts of capital budgeting which evaluates the…

Q: What is the 5-year Benefit-Cost-Ratio (BCR) at 5% interest rate for an equipment project with the…

A: The advantages to the company from a certain initiative, investment, or decision exceed the…

Q: a. What is the project payback period if the initial cost is $3,100? (Do not round intermediate…

A: Payback Period: It is the period in which the project recovers the initial cost of investment. If…

Q: Determine the Payback Period for each of the following 3 projects in as WINNINGS Enterprise is…

A: Decision rule for payback period: In mutually execlusive project, Accept the project with the…

Q: What is the present worth of a project with an initial investment of $8,000 and a net annual income…

A: Present Value Present value is the present worth of any sum of a money to be received in the future…

Q: Compare the following projects using the NPV method and the EAA method if the cost of capital is…

A: Since you have posted multiple questions at once we will solve the first one for you. To get the…

Q: Investment required Present value of cash inflows Net present value Life of the project Internal…

A: The concept of net present value is used to determine the current worth of all projected future cash…

Q: Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3…

A: The net present value represents the amount of value generated by a project or an investment for the…

Q: Compute the payback statistic for Project A if the appropriate cost of capital is 7 percent and the…

A: Caluclating Discounting Pay Back Period For Project A

Q: b) Project Swan requires an initial investment of $550,000 and is expected to generate the following…

A: Payback period is one of the method used for evaluation of project under capital budgeting. This…

Q: Calculate the discounted payback period for the following project: ICO: $45,000 WACC: 7% year ANOCFt…

Q: Use Payback analysis at 15% to select a system for the following System 1 system 2 13,000 system…

A: First cost = C Annual cashflow = A

Q: From the given table find the net present value. Thank you!

A: The present worth (NPV) is the distinction between the current worth of money inflows and the…

Q: the data below for problems 6 to 10. Year. Proj Y. Proj Z 0 ($420,000)…

A: Analyzing Projects Y and ZWe can analyze Projects Y and Z using their cash flows and the 11% cost of…

Q: Project 1 Years 1 2 3 Cash Flow -5000 500 2000 3000 1000 Cumulative Cash Flow -5000 -4500 -2500 500…

A: payback period is the period during which the firm recovers its initial investment. Formula: payback…

Q: Average Rate of Return The following data are accumulated by Watershed Inc. in evaluating two…

A: Average rate of return:-It is the average annual return (profit) from an investment. The ARR is…

Q: Consider the project balances in the table below for a typical investment project with a service…

A: Interest rate is the rate that is used to calculate the cost to be paid by the borrower for taking a…

Q: HW-Chp-8-1: A company is considering the following projects. If the MARR is 1 % / monthicompounded…

A: Capital budgeting is the process by which a corporation examines potential large projects or…

Q: Compute the payback statistic for Project A if the appropriate cost of capital is 7 percent and the…

A: Calculation of Payback Period:The payback period is 2.48 years.The project should be Accepted since…

Q: Calculate the benefit-to-cost ratio of a project that invol cash flow:

A: Calculation of Present Value Year Cashflows 1 1.09 1 110 0.917431 100.9174 2 110 0.84168…

Q: For MARR = 6% per year and b = $30,000, select from the following independent projects. Project…

A: We are going to solve this question by computing the Net Present Value of all the projects. Net…

Q: ion on four investment proposals is given below: Investment Proposal A B C D Investment required $…

A: In the Profitability Index, we can compare the present value of projected cash flows to the initial…

Q: Year 0 Cash Flow = +$25,000 (assume only 1 change in signs) Project IRR = 4.5% %3! Project DR = 6.0%…

A: Given: Project IRR = 4.5% Project Discount rate = 6%

Q: Consider the following project balances for a typical investment project with a service life of four…

Q: What is the approximate after-tax IRR on a two-year project for which the first cost is $13,000,…

A: First cost = $13,000Savings in 1st year = $5,000Savings in 2nd year = $10,000Tax rate = 40%

Q: Cash Payback Period A project has estimated annual net cash flows of $49,500. It is estimated to…

A: Pay back period means time taken to recover the cost of the investment. The lesser payback period…

Question

1- Evaluate the following projects using the payback method assuming a rule of 3 years
for payback.

Year	Project A	Project B
0	-10,000	-10,000
1	4,000	4,000
2	4,000	3,000
3	4,000	2,000
4	0	1,000,000

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Similar questions

X will pay $80,000 for a project that will generate the following cash flows: YEAR 1 2 3 4 5 7 8 CASH FLOW $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $30,000 $30,000 The payback period for the investment is: O 7 years O 6.25 years O 7 years O 7.33 years
At what interest rate the 5-year Benefit-Cost-Ratio (BCR) becomes unity for an equipment project with the immediate installation cost of -$2500 (in year 0) and a maintenance cost of -$1500 in year 3, and annual benefit of $1000 from the first year onward (n=1 to 5)? Select one: O A. 12.5% O B. 11.5% OC. 14.5% O D. 13.5% O E. 5%
ff1
Compute the payback statistic for Project A if the appropriate cost of capital is 9 percent and the maximum allowable payback period is four years. (Round your answer to 2 decimal places.) Project A Time: 0 1 2 3 4 5 Cash flow: −$2,100 $790 $810 $740 $520 $320 Payback: ? Years
out of question A company is considering a project that requires an initial cost of $8,000. The project will great dea net cash inflows of $100 in year one, $700 in year two, $6,000 in year three, $11,000 inyear four and $1 in year five. What is the NPV using 4% as the discount rate? NOTE: Enter amounts rounded to two decimals (e.g., 78.76 or 40.00) Net Cash Inflow Year 0 2 3 4 5 $100 $700 $6,000 $11,000 $12,000 NPV Total S $ $
It is known that a project for the construction of public facilities with estimated costs and benefits of the project is as follows: • 6 year project life. • The applicable discount rate is 10% in the first year and the discount for the first year the second is an increase of 5%. • Expenses incurred only in year 1 and 2, with each Rp. 515,000,000 and Rp. 415 000 000. • Benefits received from year 3 to year 6 respectively Rp. 205,000,000, Rp. 305 000 000, Rp. 405 000 000 and IDR 505,000,000 Please count and explain the Project investment criteria a. Payback Period of Investment criteria b. NPV (net present value) criteria c. IRR (Internal Rate of Return) criteria
Information on four investment proposals is given below: 6 years A B Investment required Present value of cash inflows Net present value $ (300,000) 424,800 $ 124,800 $ (140,000) 191,700 $ 51,700 Investment Proposal C $ (100,000) 151,100 $ 51,100 Life of the project 5 years 7 years Required: 1. Compute the profitability index for each investment proposal. Note: Round your answers to 2 decimal places. 2. Rank the proposals in terms of preference. Investment Profitability Proposal Index Rank Preference ABCD D $ (1,500,000) 2,001,700 $ 501,700 6 years
7 Compute the payback statistic for Project A if the appropriate cost of capital is 9 percent and the maximum allowable payback period is four years. (Round your answer to 2 decimal places.) Project A ts Time: 1 2 3 4 5 Cash flow: -$2,400 $910 $900 $800 $580 $380 Print Payback years ferences Should the project be accepted or rejected? аccepted rejected
Q3: An engineer determined the payback period of the project contract to be 9 years. The following table presents the project contact cost information: Annual cost First cost 15 M Salvage 5 M Contract 3M Ifi-13%, do you agree with that an engineer, and why?
G.3. A proposed geothermal energy project has an initial cost of $1,000K. In addition it will re- quire an infinite series of periodic maintenance expenditures at five-year intervals following the first maintenance expenditure at EOY 2. Find the equivalent annual cost with n oo and i = 88 percent per year. EOY Expenditure Initial cost $1,000K Periodic maintenance 140K Same 200K Same 260K 17 Same 320K etc. to oo etc, to oo (Ans. NAW = $137,510K/yr) %3D O2725
Evaluate the projects A and D given below with the net present value method. The interest rate is 15%. Table Four investment projects and 10-year income

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS