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

See similar textbooks

Related questions

Q: Find the future value of a five-year $96,000 investment that pays 5.50 percent and that has the…

A: Discrete compounding refers to the method of calculating compound interest or the growth of an…

Q: Determine the five-year equivalent annual annuity of the following project if the appropriate…

A: Capital budgeting techniques namely Net Present Value (NPV), Internal rate of return (IRR) and…

Q: If a project requires a $1000 initial investment, it returns $500 at the end of the first year, $600…

A: The objective of this question is to calculate the Modified Internal Rate of Return (MIRR) for a…

Q: Suppose you are offered a project with the following payments: Year Cash Flows 0 $ 9,800 1 −5,300 2…

A: YearCash flow0$9,8001-$5,3002-$4,0003-$3,1004-$1,700

Q: The NPV of a project is $8,000. If the IRR is 12%, which of the following is the required rate of…

A: Solution:- Net Present Value (NPV) means the net value in today’s term after deducting present value…

Q: Net Present Value Method, Internal Rate of Return Method, and Analysis for a Service Company The…

A: Since you have posted multiple parts at once we will solve the first three sub-parts for you. To get…

Q: uppose you are offered a project with the following cash flows: ear Cash Flows 0 1 2 3 4 $8,800…

A: IRR is one method of capital budgeting based on the time value of money where net present value is…

Q: Compute the net present value using the original estimates, but employing the 9% discount rate that…

A: Given in the question: Cost of Plant $39,20,000.00 Estimated Useful Life (in Years) 15…

Q: The Michner Corporation is trying to choose between the following two mutually exclusive design…

A: NPV (Net Present Value) and PI ( Profitability Index) are both techniques used to assess the…

Q: Find the future value of a five-year $124,000 investment that pays 8.75 percent and that has the…

A: Future value of an investment is calculated as: = Principal * ( 1 + periodic interest rate) ^ number…

Q: The Michner Corporation is trying to choose between the following two mutually exclusive design…

A: The objective of the question is to calculate the profitability index and net present value (NPV)…

Q: Calculate the payback period for the following scenario: Round your answer to 2 decimal places.

A: Payback period: It is the time within which the initial outlay of a project is recovered.

Q: If a project has a profitability index of 1.20, then the project's internal rate of return is O…

A: The profitability index is used to determine the attractiveness of an investment. It is computed by…

Q: Calculate the future value of the following annuities, assuming each annuity payment is made at the…

A: The Future Value of Annuity represents the total value of a series of equal payments or cash flows…

Q: You are evaluating a project that costs $64,000 today. The project has an inflow of $138,000 in one…

A: The process via which an investor analyzes and evaluates any project or investment and decides…

Q: If you invest $9,700 per period for the following number of periods, how much would you have…

A: aWe can solve this using Future value of annuity formula Future value is = P*((1+r)^n-1)/r "P" is…

Q: • (Discounted payback period) Gio's Restaurants is considering a project with the following expected…

A: Discounted payback period is a financial tool to measure the time taken by the project to recover…

Q: Consider a project with the following cash flows: End of Year (n) Cash Flows ($)0…

A: Capital budgeting indicates the evaluation of the profitability of possible investment and projects…

Q: Compute the discounted payback statistic for project C if the appropriate cost of capital is 7% and…

A: Discounted Payback(PB) Period shows the time period in which present values(PV) of all cash inflows…

Q: A project has the following cash flows : Year Cash Flows 0 −$11,100 1 4,750 2 6,820 3 4,320…

A: Step 1 The modified internal rate of return (MIRR) is a monetary indicator of how appealing an…

Q: Find the modified internal rate of return (MIRR) for a proposed project costing $5,489. Assume that…

A: MIRR stands for Modified Internal Rate of Return. It is a financial metric used in capital budgeting…

Q: A project has the following cash flows: Year Cash Flow 0-22,500 1 12,310 22,760 3 4, 900 4 9, 870…

A: Modified Internal rate of return is a financial measure used to evaluate the profitability of an…

Q: a. What are the project’s annual net cash inflows? b. What is the present value of the project’s…

A: Since you have asked a question with multiple sub parts , we will solve first three subparts for…

Q: Consider the following cash flows, for four different projects: (given) (a) Calculate the…

A: Capital budgeting techniques are the methods used to evaluate the profitability of investments in…

Q: (Click on the following icon in order to copy its contents into a spreadsheet.) Project M Project N…

A: IRR is the discount rate at which the net present value of the project is equal to zero. MIRR is the…

Q: 1. Determine the Net present value of the investment. (use 3 decimal places for the PV factor) 2.…

A: Net present value = Present value of cash inflows - Initial investment Payback period = Years…

Q: Iggy Company is considering three capital expenditure projects. Relevant data for the projects are…

A: Here, Depreciation Method is Straight Line Method.

Q: Calculate the net present value of the following project for discount rates of 10,20 and 40 percent.…

A: NPV is an important capital budgeting metric. NPV stands for net present value. Essentially NPV is…

Q: If a project has a net present value of $1.000 when a discount rate of 10 percent is used, what can…

A: The objective of the question is to determine the rate of return of a project given its net present…

Q: When comparing two projects with different lives, why do you compute an annuity with an equivalent…

A: When life of two mutually exclusive projects are different than NPV method does not give…

Q: a. What is each project's NPV? Negative values, if any, should be indicated by a minus sign. Do not…

A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: Find the profitability index of a project with the following cash flows using a discount rate of 4%:…

A: The profitability index is defined as the PV of all cash inflows divided by the initial…

Q: Use the following table of free cash flows for an investment to answer questions 12-15: 3 3,000 Free…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: Payback period Given the cash flow of two projects-A and B-in the following table, . and using the…

A: The payback period is the time period in which the initial cost is fully recovered using future…

Q: Assume that the net present value of a project is $ 3870 at 10%, and -$1853 at 12%. Use linear…

A: Making choices on long-term investments in projects and assets is aided by capital budgeting. These…

Q: pany that manufactures magnetic flow meters expects to undertake a project that will have the cash…

A: Annual equivalent cost is that cost that would replace all cost into single annual equivalent cost…

Q: 1. Assuming that the desired rate of return is 15%, prepare a net present value analysis for each…

A: This is related to capital budgeting. The capital budgeting tools that we have to use are NPV and…

Q: Suppose an investment has an initial capital cost of $1100, an ongoing cost of $6.50 per year and an…

A: The Internal rate of return is the discount rate at which the net present value of all cash flows…

Q: Annuity Payment Annual Rate Interest Compounded Period Invested Future Value of Annuity 1.…

A: Future Value = Annuity Payments × [(1+r)n -1/ r]

Q: The Michner Corporation is trying to choose between the following two mutually exclusive design…

A: The NPV is the tool or method for evaluating investment proposal where the net discounted benefits…

Q: Internal rate of return and modified internal rate of return. Quark Industries has three potential…

A: Inetrnal rate of return refers to the return that is being earned by the investor over the…

Q: Calculate the profitability index for project X. B. Calculate the profitability for project Y C.…

A: Profitability index = 1 + Net Present Value/Initial Investment

Q: The net present value of a project is $200000 at the discount rate of 14.8 percent. Which of the…

A: To determine which of the given options could be the Internal Rate of Return (IRR) of a project with…

Q: This quiz: 10 point(s) possible This question: 1 point(s) possible Submit quiz (Discounted payback…

A: To compute the discounted payback period, you need to follow these steps: 1. **Determine the…

Q: Megan Brink is offered the possibility of investing $8,205 today at 9% interest per year in a desire…

A: “Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: At a discount rate of 6.00%, find the present value of a perpetual payment of $ 1,000 per…

A: Perpetual payment = $1000 Discount rate = 0.06 Discount rate = 0.03 Present value of the…

Q: Compute the annual rate of return for each project. (Hint: Use average annual net income in your…

A: Annual rate of return of a project is the rate of return on the investment which has been earned…

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.
Click if you would like to Show Work for this question: Open Show Work

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

The interest rate required for a $2,050 investment to double in 5 years can be found from this equation: 4,100=2,050(1+r2)104,100=2,0501+r210 . Find the necessary rate. Your answer should be a decimal, but express it as a percentage to 2 decimal places: The rate is %
The Pan American Bottling Company is considering the purchase of a new machine that would increase the speed of bottling and save money. The net cost of this machine is $70,000. The annual cash flows have the following projections. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. Year 1 2 3 4 5 Cash Flow $ 38,000 40,000 36,000 30,000 13,000 a. If the cost of capital is 12 percent, what is the net present value of selecting a new machine? Note: Do not round intermediate calculations and round your final answer to 2 decimal places. Net present value
Find the modified internal rate of return (MIRR) for a proposed project costing $12,513. Assume that the appropriate cost of capital for projects of this risk level, at this company is 10.96%, and the estimated cash flows for the life of the project are found in the table below. (If you calculate an MIRR of 20.22% , please enter 20.22- do not include the % symbol, and use at least two decimal places). Year 1 $7,261 Year 2 $4,832 Year 3 $9,441.2 Year 4 $13,000 Year 5 $12,638
Internal rate of return and modified internal rate of return For the project shown in the following table,, calculate the internal rate of return (IRR) and modified internal rate of return (MIRR). If the cost of capital is 12.13%, indicate whether the project is acceptable according to IRR and MIRR. The project's IRR is %. (Round to two decimal places.) Data table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Initial investment (CF) Year (t) 1 2 3 4 5 Print $70,000 Cash inflows (CFt) $15,000 $25,000 $25,000 $15,000 $10,000 Done X
Find the future value FV of the given present value. (Round your answer to the nearest cent.) Present value of $12,410 at 5 7 8 % for 670 days
Net Present Value-Unequal Lives Project 1 requires an original investment of $65,200. The project will yield cash flows of $14,000 per year for 5 years. Project 2 has a computed net present value of $15,700 over a three-year life. Project 1 could be sold at the end of three years for a price of $65,000. Use the Present Value of $1 at Compound Interest and the Present Value of an Annuity of $1 at Compound Interest tables shown below. Present Value of $1 at Compound Interest 10% 0.909 0.826 0.751 0.683 Year 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 6% 10 0.943 0.890 0.840 0.792 0.747 0.705 0.665 0.627 0.592 0.558 2.673 3.465 4.212 4.917 5.582 6.210 0.621 0.564 0.513 0.467 0.424 0.386 Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 0.943 0.870 1.833 1.626 2.283 2.855 6.802 7.360 0.909 1.736 2.487 3.170 3.791 4.355 4.868 12% 5.335 5.759 6.145 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322 0.893 1.690 2.402 3.037 3.605 4.111 4.564 4.968 15% 5.328…
A project has the following cash flows : Year Cash Flows 0 −$ 12,100 1 5,350 2 7,720 3 5,120 4 −1,560 Assuming the appropriate interest rate is 7 percent, what is the MIRR for this project using the discounting approach?
Sunland Company is considering three capital expenditure projects. Relevant data for the projects are as follows. Project Investment 22A $243,500 271,400 23A 24A 283,000 Annual Life of Income Project $17,320 6 years 20,600 9 years 7 years 15,700 Annual income is constant over the life of the project. Each project is expected to have zero salvage value at the end of the project. Sunland Company uses the straight-line method of depreciation.
Consider a project with the following cash flows in dollars ($): Year Cash Flow0 -15,0001 50002 50003 50004 5000 Assume the appropriate discount rate for this project is 12%. What is the payback period for this project? (Round your answer to the tenths.)
ternal rate of return and modified internal rate of return. Quark Industries has three potential projects, all with an initial cost of $1,900,000. Given the discount rate and the future cash flow of each project in what are the IRRS and MIRRS of the three projects for Quark Industries? Vhat is the IRR for project M? %3D Data Table % (Round to two decimal places.) (Click on the following icon in order to copy its contents into a spreadsheet.) Projoct O $1,000,000 S800,000 $600,000 $400,000 $200 000 15% Project M $500,000 $500.000 Cash Flow Project N Year 1 $600,000 $600.000 S600.000 S600.000 $600.000 11% Year 2 Year 3 $500.000 $500,000 S500,000 Year 4 Year 5 Discount rate 7%
Project A has a net present value of zero when the discount factor of 20% is used. How much return is the project earning?
Internal rate of return and modified internal rate of return. Quark Industries has three potential projects, all with an initial cost of $2,100,000. Given the discount rate and the future cash flow of each project in the following table, E, what are the IRRS and MIRRS of the three projects for Quark Industries? What is the IRR for project M? % (Round to two decimal places.) What is the MIRR for project M? Data table % (Round to two decimal places.) What is the IRR for project N? (Click on the following icon g in order to copy its contents into a spreadsheet.) % (Round to two decimal places.) Cash Flow Project M Project N Project O What is the MIRR for project N? Year 1 $500,000 $700,000 $1,100,000 Year 2 $500,000 $700,000 $900,000 % (Round to two decimal places.) Year 3 $500,000 $700,000 $700,000 Year 4 $500,000 $700,000 $500,000 What is the IRR for project O? Year 5 $500,000 $700,000 $300,000 % (Round to two decimal places.) Discount rate 8% 11% 16% What is the MIRR for project O? %…

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS