Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 8%. 01234 Project A-1,250650380250300Project B-1,250250315400750 What is Project A's payback? Do not round intermediate calculations. Round your answer to four decimal placesWhat is Project A's discounted payback? Do not round intermediate calculations. Round your answer to four decimal placesWhat is Project B's payback? Do not round intermediate calculations. Round your answer to four decimal placesWhat is Project B's discounted payback? Do not round intermediate calculations. Round your answer to four decimal places

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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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Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 8%.

	0	1	2	3	4

Project A	-1,250	650	380	250	300
Project B	-1,250	250	315	400	750

What is Project A's payback? Do not round intermediate calculations. Round your answer to four decimal places

What is Project A's discounted payback? Do not round intermediate calculations. Round your answer to four decimal places

What is Project B's payback? Do not round intermediate calculations. Round your answer to four decimal places

What is Project B's discounted payback? Do not round intermediate calculations. Round your answer to four decimal places

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