Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual cash inflow from the project. NPV: Net present value (NPV) is the method to evaluate the project feasibility. This method calculates the present value of cash inflows and outflows, and then calculates the net present value of the investment. A project should be accepted if it has a positive NPV. The formula to calculate the NPV is as follows: N P V = P r e s e n t v a l u e o f c a s h i n f l o w s – P r e s e n t v a l u e o f c a s h o u t f l o w s Requirement 1: To indicate: The investment preferred on the basis of payback period.

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Answer 1

Question

Chapter 11, Problem 4QS

To determine

Concept introduction:

Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual cash inflow from the project.

NPV: Net present value (NPV) is the method to evaluate the project feasibility. This method calculates the present value of cash inflows and outflows, and then calculates the net present value of the investment. A project should be accepted if it has a positive NPV. The formula to calculate the NPV is as follows:

NPV = Present value of cash inflows – Present value of cash out flows

Requirement 1:

To indicate:

The investment preferred on the basis of payback period.

To determine

Concept introduction:

Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual cash inflow from the project.

NPV: Net present value (NPV) is the method to evaluate the project feasibility. This method calculates the present value of cash inflows and outflows, and then calculates the net present value of the investment. A project should be accepted if it has a positive NPV. The formula to calculate the NPV is as follows:

NPV = Present value of cash inflows – Present value of cash out flows

Requirement 2:

To indicate:

The possible reason for choosing investment B over A.

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Answer 2

Question

Chapter 11, Problem 4QS

To determine

Concept introduction:

Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual cash inflow from the project.

NPV: Net present value (NPV) is the method to evaluate the project feasibility. This method calculates the present value of cash inflows and outflows, and then calculates the net present value of the investment. A project should be accepted if it has a positive NPV. The formula to calculate the NPV is as follows:

NPV = Present value of cash inflows – Present value of cash out flows

Requirement 1:

To indicate:

The investment preferred on the basis of payback period.

To determine

Concept introduction:

Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual cash inflow from the project.

NPV: Net present value (NPV) is the method to evaluate the project feasibility. This method calculates the present value of cash inflows and outflows, and then calculates the net present value of the investment. A project should be accepted if it has a positive NPV. The formula to calculate the NPV is as follows:

NPV = Present value of cash inflows – Present value of cash out flows

Requirement 2:

To indicate:

The possible reason for choosing investment B over A.

Expert Solution & Answer

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Answer 3

Question

Chapter 11, Problem 4QS

To determine

Concept introduction:

Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual cash inflow from the project.

NPV: Net present value (NPV) is the method to evaluate the project feasibility. This method calculates the present value of cash inflows and outflows, and then calculates the net present value of the investment. A project should be accepted if it has a positive NPV. The formula to calculate the NPV is as follows:

NPV = Present value of cash inflows – Present value of cash out flows

Requirement 1:

To indicate:

The investment preferred on the basis of payback period.

To determine

Concept introduction:

Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual cash inflow from the project.

NPV: Net present value (NPV) is the method to evaluate the project feasibility. This method calculates the present value of cash inflows and outflows, and then calculates the net present value of the investment. A project should be accepted if it has a positive NPV. The formula to calculate the NPV is as follows:

NPV = Present value of cash inflows – Present value of cash out flows

Requirement 2:

To indicate:

The possible reason for choosing investment B over A.

Expert Solution & Answer

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Answer 4

Question

Chapter 11, Problem 4QS

To determine

Concept introduction:

Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual cash inflow from the project.

NPV: Net present value (NPV) is the method to evaluate the project feasibility. This method calculates the present value of cash inflows and outflows, and then calculates the net present value of the investment. A project should be accepted if it has a positive NPV. The formula to calculate the NPV is as follows:

NPV = Present value of cash inflows – Present value of cash out flows

Requirement 1:

To indicate:

The investment preferred on the basis of payback period.

To determine

Concept introduction:

Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual cash inflow from the project.

NPV: Net present value (NPV) is the method to evaluate the project feasibility. This method calculates the present value of cash inflows and outflows, and then calculates the net present value of the investment. A project should be accepted if it has a positive NPV. The formula to calculate the NPV is as follows:

NPV = Present value of cash inflows – Present value of cash out flows

Requirement 2:

To indicate:

The possible reason for choosing investment B over A.

Expert Solution & Answer

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Answer 5

Chapter 11, Problem 4QS

To determine

Concept introduction:

Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual cash inflow from the project.

NPV: Net present value (NPV) is the method to evaluate the project feasibility. This method calculates the present value of cash inflows and outflows, and then calculates the net present value of the investment. A project should be accepted if it has a positive NPV. The formula to calculate the NPV is as follows:

NPV = Present value of cash inflows – Present value of cash out flows

Requirement 1:

To indicate:

The investment preferred on the basis of payback period.

To determine

Concept introduction:

Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual cash inflow from the project.

NPV: Net present value (NPV) is the method to evaluate the project feasibility. This method calculates the present value of cash inflows and outflows, and then calculates the net present value of the investment. A project should be accepted if it has a positive NPV. The formula to calculate the NPV is as follows:

NPV = Present value of cash inflows – Present value of cash out flows

Requirement 2:

To indicate:

The possible reason for choosing investment B over A.

Answer 6

Chapter 11, Problem 4QS

To determine

Concept introduction:

Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual cash inflow from the project.

NPV: Net present value (NPV) is the method to evaluate the project feasibility. This method calculates the present value of cash inflows and outflows, and then calculates the net present value of the investment. A project should be accepted if it has a positive NPV. The formula to calculate the NPV is as follows:

NPV = Present value of cash inflows – Present value of cash out flows

Requirement 1:

To indicate:

The investment preferred on the basis of payback period.

Answer 7

Chapter 11, Problem 4QS

To determine

Concept introduction:

Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual cash inflow from the project.

NPV: Net present value (NPV) is the method to evaluate the project feasibility. This method calculates the present value of cash inflows and outflows, and then calculates the net present value of the investment. A project should be accepted if it has a positive NPV. The formula to calculate the NPV is as follows:

NPV = Present value of cash inflows – Present value of cash out flows

Requirement 1:

To indicate:

The investment preferred on the basis of payback period.

Answer 8

To determine

Concept introduction:

Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual cash inflow from the project.

NPV: Net present value (NPV) is the method to evaluate the project feasibility. This method calculates the present value of cash inflows and outflows, and then calculates the net present value of the investment. A project should be accepted if it has a positive NPV. The formula to calculate the NPV is as follows:

NPV = Present value of cash inflows – Present value of cash out flows

Requirement 2:

To indicate:

The possible reason for choosing investment B over A.

Answer 9

To determine

Concept introduction:

Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual cash inflow from the project.

NPV: Net present value (NPV) is the method to evaluate the project feasibility. This method calculates the present value of cash inflows and outflows, and then calculates the net present value of the investment. A project should be accepted if it has a positive NPV. The formula to calculate the NPV is as follows:

NPV = Present value of cash inflows – Present value of cash out flows

Requirement 2:

To indicate:

The possible reason for choosing investment B over A.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 11 - Prob. 1MCQ Ch. 11 - Prob. 2MCQ Ch. 11 - Prob. 3MCQ Ch. 11 - Prob. 4MCQ Ch. 11 - Prob. 5MCQ Ch. 11 - Prob. 1DQ Ch. 11 - What is capital budgeting?Ch. 11 - Identify four reasons that capital budgeting...Ch. 11 - Prob. 4DQ Ch. 11 - Prob. 5DQ

Solution Summary: The author introduces the concept of payback period, which is calculated by dividing the initial investment by the annual cash inflow from the project.

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