The company has two proposed projects, both with 5-year expected lives and identical initial outlays of P110,000. Both of these projects involve additions to the company’s successful product line, and as a result, the required rate of return on both projects has been established at 12%. The expected cash flows from each project are as follows: PROJECT A (P) PROJECT B (P) CF 1 20,000 40,000 CF 2 30,000 40,000 CF 3 40,000 40,000 CF 4 50,000 40,000 CF 5 70,000 40,000 The payback period on project A is _ years, if the company imposes a 3-year maximum acceptable payback period. Round to the nearest whole number.
The company has two proposed projects, both with 5-year expected lives and identical initial outlays of P110,000. Both of these projects involve additions to the company’s successful product line, and as a result, the required rate of return on both projects has been established at 12%. The expected cash flows from each project are as follows: PROJECT A (P) PROJECT B (P) CF 1 20,000 40,000 CF 2 30,000 40,000 CF 3 40,000 40,000 CF 4 50,000 40,000 CF 5 70,000 40,000 The payback period on project A is _ years, if the company imposes a 3-year maximum acceptable payback period. Round to the nearest whole number.
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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The company has two proposed projects, both with 5-year expected lives and identical initial outlays of P110,000. Both of these projects involve additions to the company’s successful product line, and as a result, the required rate of return on both projects has been established at 12%. The expected cash flows from each project are as follows:
|
|
PROJECT A (P) |
PROJECT B (P) |
|
CF 1 |
20,000 |
40,000 |
|
CF 2 |
30,000 |
40,000 |
|
CF 3 |
40,000 |
40,000 |
|
CF 4 |
50,000 |
40,000 |
|
CF 5 |
70,000 |
40,000 |
The payback period on project A is _ years, if the company imposes a 3-year maximum acceptable payback period.
Round to the nearest whole number.
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