Problem 10.20Nugent Communication Corp. is investing $9871,647 in new technologies. The company expects significant benefits in the first three years after installation (as can be seen by thefollowing cash flows), and smaller constant benefits in each of the next four years.Year134-7Cash Flows$2,015,329 $5,179,619$2,934,922 $1,372,250What is the discounted payback period for the project assuming a discount rate of 10 percent? (Round answer to 2 decimal places, e.g. 15.25. If discounted payback periodexceeds life of the project, enter 0 for the answer.)The discounted payback period for the project isyears.Click if you would like to Show Work for this question: Open Show Work

Payback period (PBP) is the time period in which the investor is able to cover the costs invested.

What is the discounted payback period for the project assuming a discount rate of 10 percent? (Round answer to 2 decimal places, e.g. 15.25. If discounted payback period exceeds life of the project, enter 0 for the answer.)

What is the discounted payback period for the project assuming a discount rate of 10 percent? (Round answer to 2 decimal places, e.g. 15.25. If discounted payback period exceeds life of the project, enter 0 for the answer.)

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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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Problem 10.20
Nugent Communication Corp. is investing $9871,647 in new technologies. The company expects significant benefits in the first three years after installation (as can be seen by the
following cash flows), and smaller constant benefits in each of the next four years.
Year
1
3
4-7
Cash Flows
$2,015,329 $5,179,619
$2,934,922 $1,372,250
What is the discounted payback period for the project assuming a discount rate of 10 percent? (Round answer to 2 decimal places, e.g. 15.25. If discounted payback period
exceeds life of the project, enter 0 for the answer.)
The discounted payback period for the project is
years.
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Compute the discounted payback statistic for Project C if the appropriate cost of capital is 6 percent and the maximum allowable discounted payback period is three years. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Project C Time: 0 1 2 3 4 5 Cash flow: −$2,800 $1,200 $1,020 $1,060 $660 $460 Should the project be accepted or rejected?multiple choice accepted rejected
2.1 Calculate the Payback Period of both projects (answers expressed in years, months and days.) Which project would you choose on the basis of payback period? Why?2.2 Calculate the Accounting Rate of Return for both projects (answer expressed to two decimal places).2.3 Calculate the Net Present Value for both projects. (Round off amounts to the nearest Rand.)2.4 Based on your calculations from 2.1 – 2.3, which project should Rothmans Limited choose? Why? .
A project has a NPV of +60,000 dollars at the interest rate of 8%. A NPV of -30,000 dollars is realised at an interest rate of 10%. What is the IRR when calculated using the linear interpolation method? Select the best answer from the options listed below. 9.33% b. 8.67% 9% d. 9.67% a. C.
4. If the terminal balance of a 5-year project at 10% s0 then which one below is true? A. The IRR of the project is less than 10% B. The future worth of the project is greater than 0 C. Discounted payback perlod is 5 years OD. The present worth of the project is less than 0 5 In an incremental IRR analysis, which analysis period should be used to compare 2 mutually altemative projects with 3 and 4 years of useful lives? (Assume an indefinite analynis perlod and that the projects are repeatable) O A. B years O B. 12 years OC. 4 years D. 3 years
Nikul
Please, this is the next question
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Compute the pay back, discounted pay back, NPV and IRR of the following projects; Assume a discount rate of 10% C0 C1 C2 C3 Project A -2000 500 500 5000 Project B -2000 500 1800 0 Project C -2000 1800 500 0
(Discounted payback period) Gio's Restaurants is considering a project with the following expected cash flows: Year 0 Project Cash Flow (millions) $(180) 1 2 3 4 95 60 95 110 (Click on the icon in order to copy its contents into a spreadsheet.) If the project's appropriate discount rate is 13 percent, what is the project's discounted payback period? The project's discounted payback period is years. (Round to two decimal places.)

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