Payback period Given the cash flow of two projects-A and B-in the following table, . and using the payback period decision model, which project(s) do you accept and which project(s) do you reject it you have a 3-year cutoff period for recapturing the initial cash outflow? For payback period calculations, assume that the cash flow is equally distributed over the year. What is the payback period for project A? years (Round to one decimal place.)

Payback period Given the cash flow of two projects-A and B-in the following table, . and using the payback period decision model, which project(s) do you accept and which project(s) do you reject it you have a 3-year cutoff period for recapturing the initial cash outflow? For payback period calculations, assume that the cash flow is equally distributed over the year. What is the payback period for project A? years (Round to one decimal place.)

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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Given the following cash flows for project X and project Y, Year Project X Project Y 0 -55000 -100000 1 20000 15000 2 13500 17000 3 11000 19000 4 10000 25000 5 9000 30000 6 7500 35000 Calculate the NPV, IRR, MIRR and traditional payback period for each project, assuming a required rate of return of 7 percent If the projects are independent, which project(s) should be selected? If they are mutually exclusive, which project should be selected? (Answer in word form please)
Calculate/estimate the IRR(s) for a 6-year project with the following cash flows: CF0 = -50, CF1 =28 = CF2 = CF3 = CF4 = CF5, and CF6 = -93. In Excel, plot the NPV (= Y axis) against r (= discountrate), using r = 0%, 2%, and so on until you find all IRRs in the chart. Identify/estimate all IRRs.
Find the profitability index of a project with the following cash flows using a discount rate of 4%: Period 0: -1000 Period 1: 793 Period 2: 391 Period 3: 204 Round your answer to the nearest one-hundredth.
Use the following table of free cash flows for an investment to answer questions 12-15: 2 5,000 3 3,000 Free Cash Flow -8,000 1,000 12. What is the payback period for this project? If the required payback period is 2 years, would you invest in this project based on the payback period? 13. If the discount rate is 10%, what is the discounted payback period for this project? If the required discounted payback period is 2 years, would you invest in this project based on the payback period? 14. What is the internal rate of return on this project? If the discount rate (or WACC) is 10%, would you invest in this project? 15. With a discount rate (or WACC) of 10%, what is the net present value (NPV) of this project and would you accept or reject the project?
Payback period. Given the cash flow of two projects—A and B—and using the payback period decision model, which project(s) do you accept and which project(s) do you reject if you have a three-year cutoff period for recapturing the initial cash outflow? For payback period calculations, assume that the cash flow is equally distributed over the year. Cash Flow A B Cost $14,000 $110,000 Cash flow year 1 $5,600 $44,000 Cash flow year 2 $5,600 $33,000 Cash flow year 3 $5,600 $22,000 Cash flow year 4 $5,600 $11,000 Cash flow year 5 $5,600 $0 Cash flow year 6 $5,600 $0
For the following stream of free cash flows, calculate the payback period and indicate whether you would invest in the project with a four year maximum allowable payback period. Year Free Cash Flows 0 -45,452 3.8 years; Invest 3.8 years; Do not invest 4.8 years; Invest 4.8 years; Do not invest 1 10,005 2 14,921 3 12,537 4 10,452 5 21,455
Assume that it costs $1,000 to start a project. If the project will give $400 profit in the first year, $500 in the second year and $300 in the third year. find the payback period. Now assume that the interest rate is 10%, find the net present value (NPV) and the profitability index (PI) for this project
There is a project with the following cash flows : Year Cash Flow 0 −$ 23,350 1 6,300 2 7,400 3 8,450 4 7,350 5 5,900 What is the payback period?
Compute the payback period statistic for Project X and recommend whether the firm should accept or reject the project with the cash flows shown in the chart if the maximum allowable payback is four years. year 0-(-$1,450) Year 1-$250 Year 2-$380 Year 3-$620 Year 4-$1,000 Year 5-$100
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Consider the following two mutually exclusive projects: Year Cash flow project A (RM) 0 1 2 3 4 -54,000 12,700 23,200 27,600 46,500 Cash flow Project B (RM) -23,000 11,600 11,200 12,500 6,000 Whichever project you choose, if you require a 14 percent return on your investment i) Compute the payback period for both project ii) Compute the Net Present Value (NPV) for both projects. iii) Which project do you prefer and which? Fully explain the result of your analysis
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) -$ 15,456 5,225 8,223 13,013 8,705 0 1 234 -$ 276,363 26,400 51,000 57,000 402,000 Whichever project you choose, if any, you require a 6 percent return on your investment. a. What is the payback period for Project A? Payback period b. What is the payback period for Project B? Payback period c. What is the discounted payback period for Project A? Discounted payback period

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