Principles of Managerial Finance (14th Edition) (Pearson Series in Finance)
14th Edition
ISBN: 9780133507690
Author: Lawrence J. Gitman, Chad J. Zutter
Publisher: PEARSON
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Question
Chapter 10, Problem 10.22P
a)
Summary Introduction
To determine:
Payback period for the proposed investment.
Introduction:
Every investment requires a time period to pay back the cost of investment. The time period taken to recover the cost of an investment is known as the payback period.
b)
Summary Introduction
To determine:
The
Introduction:
The difference between the present value of cash inflows and the present value of
c)
Summary Introduction
To determine:
The
Introduction:
Internal Rate of Return is a measure used in the capital budgeting which estimates the profitability of potential investments. IRR is computed as a discount rate that makes the net
d)
Summary Introduction
To determine:
Evaluation of acceptability of the proposed plan based on NPV and IRR.
Introduction:
The difference between the present value of cash inflows and the present value of cash outflows over a period of time is known as the Net Present value. Internal
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Payback, NPV, and IRR Rieger International is evaluating the feasibility of investing $94,000 in a piece of equipment that has a 5-year life. The firm has estimated the
cash inflows associated with the proposal as shown in the following table: . The firm has a 9% cost of capital.
sons
a. Calculate the payback period for the proposed investment.
b. Calculate the net present value (NPV) for the proposed investment.
c. Calculate the internal rate of return (IRR), rounded to the nearest whole percent, for the proposed investment.
d. Evaluate the acceptability of the proposed investment using NPV and IRR. What recommendation would you make relative to implementation of the project?
a. The payback period of the proposed investment is
years. (Round to two decimal places.)
b. The NPV of the proposed investment is $. (Round to the nearest cent.)
c. The IRR of the proposed investment is
%. (Round to two decimal places.)
d. Should Rieger International accept or reject the proposed investment?…
Payback, NPV, and IRR Rieger International is evaluating the feasibility of investing $69,000 in a piece of equipment that has a 5-year life. The firm has estimated the cash inflows associated with the proposal as
shown in the following table: . The firm has a 9% cost of capital.
a. Calculate the payback period for the proposed investment.
b. Calculate the net present value (NPV) for the proposed investment.
c. Calculate the internal rate of return (IRR), rounded to the nearest whole percent, for the proposed investment.
d. Evaluate the acceptability of the proposed investment using NPV and IRR. What recommendation would you make relative to implementation of the project?
a. The payback period of the proposed investment is
years. (Round to two decimal places.)
Data Table
|(Click on the icon located on the top-right corner of the data table below in order to
copy its contents into a spreadsheet.)
Year (f)
Cash inflows (CF)
$25,000
$25,000
$20,000
$20,000
1
3
4
$20,000
Print
Done
Enter…
Payback, NPV, and IRR Rieger International is evaluating the feasibility of investing $106,000 in a piece of equipment that has a 5-year life. The firm has estimated
the cash inflows associated with the proposal as shown in the following table: . The firm has a 9% cost of capital.
a. Calculate the payback period for the proposed investment.
b. Calculate the net present value (NPV) for the proposed investment.
c. Calculate the internal rate of return (IRR), rounded to the nearest whole percent, for the proposed investment.
d. Evaluate the acceptability of the proposed investment using NPV and IRR. What recommendation would you make relative to implementation of the project?
a. The payback period of the proposed investment is years. (Round to two decimal places.)
- X
Data Table
(Click on the icon located on the top-right corner of the data table below in order to
copy its contents into a spreadsheet.)
Year (t)
Cash inflows (CF)
$40,000
$20,000
$35,000
$35,000
$35,000
1
4
Enter your…
Chapter 10 Solutions
Principles of Managerial Finance (14th Edition) (Pearson Series in Finance)
Ch. 10.1 - What is the financial managers goal in selecting...Ch. 10.2 - Prob. 1FOPCh. 10.2 - What is the payback period? How is it calculated?Ch. 10.2 - What weaknesses are commonly associated with the...Ch. 10.3 - How is the net present value (NPV) calculated for...Ch. 10.3 - Prob. 10.5RQCh. 10.3 - Prob. 10.6RQCh. 10.4 - Prob. 10.8RQCh. 10.4 - Prob. 10.9RQCh. 10.4 - Prob. 10.10RQ
Ch. 10.5 - Prob. 1FOECh. 10.5 - How is a net present value profile used to compare...Ch. 10.5 - Prob. 10.13RQCh. 10 - Prob. 1ORCh. 10 - Prob. 10.1STPCh. 10 - Elysian Fields Inc. uses a maximum payback period...Ch. 10 - Prob. 10.2WUECh. 10 - Prob. 10.3WUECh. 10 - Prob. 10.4WUECh. 10 - Prob. 10.5WUECh. 10 - Prob. 10.1PCh. 10 - Payback comparisons Nova Products has a 5-year...Ch. 10 - Prob. 10.3PCh. 10 - Long-term investment decision, payback method Bill...Ch. 10 - Prob. 10.5PCh. 10 - Prob. 10.6PCh. 10 - Prob. 10.7PCh. 10 - Prob. 10.8PCh. 10 - Prob. 10.9PCh. 10 - Prob. 10.10PCh. 10 - Prob. 10.11PCh. 10 - Prob. 10.12PCh. 10 - NPV and EVA A project costs 2,500,000 up front and...Ch. 10 - Prob. 10.14PCh. 10 - Prob. 10.15PCh. 10 - Prob. 10.16PCh. 10 - Prob. 10.17PCh. 10 - Prob. 10.18PCh. 10 - Prob. 10.19PCh. 10 - Prob. 10.20PCh. 10 - Prob. 10.21PCh. 10 - Prob. 10.22PCh. 10 - Prob. 10.23PCh. 10 - Prob. 10.24PCh. 10 - Prob. 10.25PCh. 10 - Integrative: Multiple IRRs Froogle Enterprises is...Ch. 10 - Integrative: Conflicting Rankings The High-Flying...Ch. 10 - ETHICS PROBLEM Diane Dennison is a financial...Ch. 10 - Spreadsheet Exercise The Drillago Company is...
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