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 Cash Flow Year 1 $375,000 Year 2 $500,000 Year 3 $400,000 Year 4 $425,000 If the project's weighted average cost of capital (WACC) is 9%, what is its NPV? O $239,865 O $299,831 O $344,806 O $269,848 Which of the following statements indicate a disadvantage of using the discounted payback period for capital budgeting decisions? Check all that аpply. O The discounted payback period is calculated using net income instead of cash flows. O The discounted payback period does not take the time value of money into account. O The discounted payback period does not take the project's entire life into account.

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 Cash Flow Year 1 $375,000 Year 2 $500,000 Year 3 $400,000 Year 4 $425,000 If the project's weighted average cost of capital (WACC) is 9%, what is its NPV? O $239,865 O $299,831 O $344,806 O $269,848 Which of the following statements indicate a disadvantage of using the discounted payback period for capital budgeting decisions? Check all that аpply. O The discounted payback period is calculated using net income instead of cash flows. O The discounted payback period does not take the time value of money into account. O The discounted payback period does not take the project's entire life into account.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Suppose an opportunity arises to invest $10 million that will pay $5.5 million at the end of year 1 and $6.5 million at the end of year two. The cost of capital is 10%. Find NPV. Is the project a go? Show and explain Suppose the project’s cash flows are delayed a year, but not the outlay. How does that change your answer? Show and explain Suppose there is a cost overrun of 20%. The cash flows and their timing are the same as in part a. How does this change your answer? Show and explain. Suppose the second-year cash flow decreases to $5 million. The outlay and timing of the cash flows are the same as in part a. How does this change your answer? Show and explain. Evaluate the proposal. Would you undertake it?
The NPV and payback period What information does the payback period provide? Suppose ABC Telecom Inc.’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 Cash Flow Year 1 $350,000 Year 2 $500,000 Year 3 $500,000 Year 4 $400,000 If the project’s weighted average cost of capital (WACC) is 10%, what is its NPV? $280,268 $224,214 $252,241 $322,308 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 is calculated using net income instead of cash flows. The discounted payback period does not take the time value of money into account.
7. The NPV and payback period What information does the payback period provide? Suppose Praxis Corporation'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 Cash Flow Year 1 $350,000 Year 2 $475,000 Year 3 $475,000 Year 4 $400,000 If the project's weighted average cost of capital (WACC) is 10%, what is its NPV? $278,324 $333,989 $292,240 $236,575 Which of the following statements indicate a disadvantage of using the discounted payback period for capital budgeting decisions? Check all that apply. ☐ The discounted payback period does not take the project's entire life into account. The discounted payback period does not take the time value of money into account. The discounted payback period is calculated using net income instead of cash flows. ☐
A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows: Year 0 1 2 3 NPV Cash Flow -$ 28,600 12,600 What is the NPV for the project if the required return is 11 percent? (Do not round Intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV At a required return of 11 percent, should the firm accept this project? O No 15,600 11,600 Yes What is the NPV for the project if the required return is 25 percent? (A negative answer should be Indicated by a minus sign. Do not round Intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) At a required return of 25 percent, should the firm accept this project? O Yes O NO
I think the payback periods are correct, I just need the different cash flows of each year + the final question at the bottom. Thank you.
Computer Consultants Inc. is considering a project that has the following cash flow and cost of capital (r) data. What is the project's MIRR? Note that a project's MIRR can be less than the cost of capital (and even negative), in which case it will be rejected. Year Cash flows r=13.00% 20.64% 18.35% 21.50% 19.32% 22.78% 0 -$1,000 1 $750 2 $600 3 $120
Molin Inc. is considering to a project that will have the following series of cash flow from assets (in $ million): Year Cash flow 0 -1,580.92 1 453 2 749 3 935 The required return for the project is 6%. Year Cash flow 0 -1,580.92 1 453 2 749 3 935 1. The required return for the project is 6%. 2. What is the project's profitability index? 3. What is the internal rate of return (IRR) for this project?
Tiffany Co. is analyzing two projects for the future. Assume that only one project can be selected. Project Y Project X Cost of machine P680,000 P600,000 Net cash flow: Year 1 240,000 40,000 Year 2 240,000 260,000 Year 3 240,000 260,000 Year 4 0 200,000 If the company is using the payback period method and it requires a payback of three years or less, which project should be selected? Group of answer choices Project Y. Project Y because it has a lower initial investment. Both X and Y are acceptable projects. Project X. Neither X nor Y is an acceptable project.
Solve the attahment.
1. what amount should be used as the initial cash flow for this project and why?? 2. What is the after-tax salvage value for the spectrometer? 3. What is the MPV of the project? Should the firm accept or reject this project?
A project that costs $2,300 to install will provide annual cash flows of $730 for each of the next 5 years. a. Calculate the NPV if the opportunity cost of capital is 12%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) NPV b. Is this project worth pursuing? Yes O No c. What is the project's internal rate of return IRR? (Do not round intermediate calculations. Round your answer to 2 decimal places.) %24
Suppose Acme Manufacturing Corporation'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 Cash Flow $350,000 $500,000 $450,000 $475,000 If the project's weighted average cost of capital (WACC) is 7%, what is its NPV? O $334,825 $418,531 O $355,751 $397,604