Payback period of each project. 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.

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Answer 1

Question

Chapter 10, Problem 10.24P

a)

Summary Introduction

To determine:

Payback period of each project.

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 Net Present Value for each project.

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.

c)

Summary Introduction

To determine:

The Internal rate of return for each of the project.

Introduction:

Internal Rate of Return is a measure utilized in the capital budgeting which estimates the profitability of potential investments. IRR is computed as a discount rate, which makes the net present value of all cash flows from an investment as zero.

d)

Summary Introduction

To determine:

The Net Present Value profiles for each project.

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.

NPV=CF1(1+r)1+CF2(1+r)2+CF3(1+r)3+CF4(1+r)4−I0 (1)

NPV profile is a graphic representation of the NPV of a project at different discount rates.

e)

Summary Introduction

To determine:

Rank the projects based on the payback period, NPV and IRR values.

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. 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 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 present value of all cash flows from an investment as zero.

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General Finance Question

Consider the following simplified financial statements for the Yoo Corporation (assuming no income taxes): Income Statement Balance Sheet Sales Costs $ 40,000 Assets 34,160 $26,000 Debt Equity $ 7,000 19,000 Net income $ 5,840 Total $26,000 Total $26,000 The company has predicted a sales increase of 20 percent. Assume Yoo pays out half of net income in the form of a cash dividend. Costs and assets vary with sales, but debt and equity do not. Prepare the pro forma statements. (Input all amounts as positive values. Do not round intermediate calculations and round your answers to the nearest whole dollar amount.) Pro forma income statement Sales Costs $ 48000 40992 Assets $ 31200 Pro forma balance sheet Debt 7000 Equity 19000 Net income $ 7008 Total $ 31200 Total 30304 What is the external financing needed? (Do not round intermediate calculations. Negative amount should be indicated by a minus sign.) External financing needed $ 896

Answer 2

Question

Chapter 10, Problem 10.24P

a)

Summary Introduction

To determine:

Payback period of each project.

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 Net Present Value for each project.

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.

c)

Summary Introduction

To determine:

The Internal rate of return for each of the project.

Introduction:

Internal Rate of Return is a measure utilized in the capital budgeting which estimates the profitability of potential investments. IRR is computed as a discount rate, which makes the net present value of all cash flows from an investment as zero.

d)

Summary Introduction

To determine:

The Net Present Value profiles for each project.

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.

NPV=CF1(1+r)1+CF2(1+r)2+CF3(1+r)3+CF4(1+r)4−I0 (1)

NPV profile is a graphic representation of the NPV of a project at different discount rates.

e)

Summary Introduction

To determine:

Rank the projects based on the payback period, NPV and IRR values.

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. 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 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 present value of all cash flows from an investment as zero.

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Answer 3

Question

Chapter 10, Problem 10.24P

a)

Summary Introduction

To determine:

Payback period of each project.

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 Net Present Value for each project.

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.

c)

Summary Introduction

To determine:

The Internal rate of return for each of the project.

Introduction:

Internal Rate of Return is a measure utilized in the capital budgeting which estimates the profitability of potential investments. IRR is computed as a discount rate, which makes the net present value of all cash flows from an investment as zero.

d)

Summary Introduction

To determine:

The Net Present Value profiles for each project.

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.

NPV=CF1(1+r)1+CF2(1+r)2+CF3(1+r)3+CF4(1+r)4−I0 (1)

NPV profile is a graphic representation of the NPV of a project at different discount rates.

e)

Summary Introduction

To determine:

Rank the projects based on the payback period, NPV and IRR values.

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. 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 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 present value of all cash flows from an investment as zero.

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Answer 4

Question

Chapter 10, Problem 10.24P

a)

Summary Introduction

To determine:

Payback period of each project.

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 Net Present Value for each project.

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.

c)

Summary Introduction

To determine:

The Internal rate of return for each of the project.

Introduction:

Internal Rate of Return is a measure utilized in the capital budgeting which estimates the profitability of potential investments. IRR is computed as a discount rate, which makes the net present value of all cash flows from an investment as zero.

d)

Summary Introduction

To determine:

The Net Present Value profiles for each project.

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.

NPV=CF1(1+r)1+CF2(1+r)2+CF3(1+r)3+CF4(1+r)4−I0 (1)

NPV profile is a graphic representation of the NPV of a project at different discount rates.

e)

Summary Introduction

To determine:

Rank the projects based on the payback period, NPV and IRR values.

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. 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 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 present value of all cash flows from an investment as zero.

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Answer 5

Chapter 10, Problem 10.24P

a)

Summary Introduction

To determine:

Payback period of each project.

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 Net Present Value for each project.

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.

c)

Summary Introduction

To determine:

The Internal rate of return for each of the project.

Introduction:

Internal Rate of Return is a measure utilized in the capital budgeting which estimates the profitability of potential investments. IRR is computed as a discount rate, which makes the net present value of all cash flows from an investment as zero.

d)

Summary Introduction

To determine:

The Net Present Value profiles for each project.

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.

NPV=CF1(1+r)1+CF2(1+r)2+CF3(1+r)3+CF4(1+r)4−I0 (1)

NPV profile is a graphic representation of the NPV of a project at different discount rates.

e)

Summary Introduction

To determine:

Rank the projects based on the payback period, NPV and IRR values.

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. 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 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 present value of all cash flows from an investment as zero.

Answer 6

Chapter 10, Problem 10.24P

a)

Summary Introduction

To determine:

Payback period of each project.

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.

Answer 7

Chapter 10, Problem 10.24P

a)

Summary Introduction

To determine:

Payback period of each project.

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.

Answer 8

b)

Summary Introduction

To determine:

The Net Present Value for each project.

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.

Answer 9

b)

Summary Introduction

To determine:

The Net Present Value for each project.

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.

Answer 10

c)

Summary Introduction

To determine:

The Internal rate of return for each of the project.

Introduction:

Internal Rate of Return is a measure utilized in the capital budgeting which estimates the profitability of potential investments. IRR is computed as a discount rate, which makes the net present value of all cash flows from an investment as zero.

Answer 11

c)

Summary Introduction

To determine:

The Internal rate of return for each of the project.

Introduction:

Internal Rate of Return is a measure utilized in the capital budgeting which estimates the profitability of potential investments. IRR is computed as a discount rate, which makes the net present value of all cash flows from an investment as zero.

Answer 12

d)

Summary Introduction

To determine:

The Net Present Value profiles for each project.

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.

NPV=CF1(1+r)1+CF2(1+r)2+CF3(1+r)3+CF4(1+r)4−I0 (1)

NPV profile is a graphic representation of the NPV of a project at different discount rates.

Answer 13

d)

Summary Introduction

To determine:

The Net Present Value profiles for each project.

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.

NPV=CF1(1+r)1+CF2(1+r)2+CF3(1+r)3+CF4(1+r)4−I0 (1)

NPV profile is a graphic representation of the NPV of a project at different discount rates.

Answer 14

e)

Summary Introduction

To determine:

Rank the projects based on the payback period, NPV and IRR values.

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. 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 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 present value of all cash flows from an investment as zero.

Answer 15

e)

Summary Introduction

To determine:

Rank the projects based on the payback period, NPV and IRR values.

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. 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 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 present value of all cash flows from an investment as zero.

Answer 16

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Answer 17

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Answer 18

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Answer 19

Ch. 10.1 - What is the financial managers goal in selecting...Ch. 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. 10.5RQ Ch. 10.3 - Prob. 10.6RQ Ch. 10.4 - Prob. 10.8RQ Ch. 10.4 - Prob. 10.9RQ Ch. 10.4 - Prob. 10.10RQ Ch. 10.5 - How is a net present value profile used to compare...

Payback period of each project. 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.

Solution Summary: The author explains the payback period of each investment, and the Net Present Value for each project.

Concept explainers

Videos

To determine:

Payback period of each project.

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.

To determine:

The Net Present Value for each project.

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.

Want to see the full answer?

Chapter 10 Solutions

Payback period of each project. 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.

Solution Summary: The author explains the payback period of each investment, and the Net Present Value for each project.

Concept explainers

Videos

To determine: Payback period of each project. 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.

To determine: The Net Present Value for each project. 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.

Want to see the full answer?

Chapter 10 Solutions

To determine:

Payback period of each project.

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.

To determine:

The Net Present Value for each project.

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.