If the project's weighted average cost of capital (WACC) is 9%, what is its NPV? O $307,147 EB O $341,274 O $358,338 O $273,019 Which of the following statements indicate a disadvantage of using the discounted payback period for capital budgeting decisions? Check all that apply. The discounted payback period does not take the project's entire life into account. The discounted payback period does not take the time value of money into account. The discounted payback period is calculated using net income instead of cash flows.
If the project's weighted average cost of capital (WACC) is 9%, what is its NPV? O $307,147 EB O $341,274 O $358,338 O $273,019 Which of the following statements indicate a disadvantage of using the discounted payback period for capital budgeting decisions? Check all that apply. The discounted payback period does not take the project's entire life into account. The discounted payback period does not take the time value of money into account. The discounted payback period is calculated using net income instead of cash flows.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:5. The NPV and payback period
What information does the payback period provide?
Suppose Omni Consumer Products's CFO is evaluating a project with the following cash inflows. She does not know the project's initial cost; however,
she does know that the project's regular payback period is 2.5 years.
Year
Year 1
Year 2
Year 3
Year 4
If the project's weighted average cost of capital (WACC) is 9%, what is its NPV?
оооо
0
Cash Flow
$350,000
$475,000
$400,000
$475,000
0
0
$307,147
$341,274
Which of the following statements indicate a disadvantage of using the discounted payback period for capital budgeting decisions? Check all that
apply.
$358,338
$273,019
The discounted payback period does not take the project's entire life into account.
The discounted payback period does not take the time value of money into account.
The discounted payback period is calculated using net income instead of cash flows.
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