Given the following attributes of an investment project with a five-year life: Investment outlay, year 0, $5,000; after-tax cash inflows, year 1, $800; year 2, $900; year 3, $1,500; year 4, $1,800, and year 5, $3,200. (a) Use the built-in NPV function of Excel to estimate the NPV of this project. Assume an after-tax discount rate of 12.0%. (b) Estimate the payback period, in years, for this project under the assumption that cash inflows occur evenly throughout the year. (Round "Payback period" to the nearest whole number. Negative amounts should be entered with a minus sign. Round your answers to the nearest whole dollar amount.) Payback period Year 0 1 2 3 4 5 NPV After-tax Cash Flows yours Cumulative After-tax Cash Flows
Given the following attributes of an investment project with a five-year life: Investment outlay, year 0, $5,000; after-tax cash inflows, year 1, $800; year 2, $900; year 3, $1,500; year 4, $1,800, and year 5, $3,200. (a) Use the built-in NPV function of Excel to estimate the NPV of this project. Assume an after-tax discount rate of 12.0%. (b) Estimate the payback period, in years, for this project under the assumption that cash inflows occur evenly throughout the year. (Round "Payback period" to the nearest whole number. Negative amounts should be entered with a minus sign. Round your answers to the nearest whole dollar amount.) Payback period Year 0 1 2 3 4 5 NPV After-tax Cash Flows yours Cumulative After-tax Cash Flows
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Do not give answer in image
Transcribed Image Text:Given the following attributes of an investment project with a five-year life: investment outlay, year 0, $5,000; after-tax cash inflows,
year 1, $800: year 2, $900; year 3, $1,500; year 4, $1,800, and year 5, $3,200. (a) Use the built-in NPV function of Excel to estimate the
NPV of this project. Assume an after-tax discount rate of 12.0%. (b) Estimate the payback period, in years, for this project under the
assumption that cash inflows occur evenly throughout the year. (Round "Payback period" to the nearest whole number. Negative
amounts should be entered with a minus sign. Round your answers to the nearest whole dollar amount.)
Payback period
Year
0
1
2
3
4
5
NPV =
After-tax
Cash Flows
years
Cumulative
After-tax Cash
Flows
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!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education