Fundamentals of Financial Management
15th Edition
ISBN: 9780357307724
Author: Brigham
Publisher: CENGAGE L
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Chapter 11, Problem 5P
DISCOUNTED PAYBACK Refer to problem 11-1. What is the project’s discounted payback?
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What type of projects does the Payback method favor?
Can we select projects according to their
corresponding payback period?
3.
n
0
1
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A
-$250
$60
$970
B
-$200
$90
$90
$60
$60
Net Cashflow
с
-$70
$20
$10
$5
-$50
$60
$50
$40
$30
$20
$10
D
-$300
$270
$250
-$129
-$20
$120
$40
E
-$90
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-$50
$0
$150
$150
$100
$100
Chapter 11 Solutions
Fundamentals of Financial Management
Ch. 11 - How are project classifications used in the...Ch. 11 - Prob. 2QCh. 11 - Why is the NFV of a relatively long-term project...Ch. 11 - Prob. 4QCh. 11 - If two mutually exclusive projects were being...Ch. 11 - Discuss the following statement: If a firm has...Ch. 11 - Why might it be rational for a small firm that...Ch. 11 - Project X is very risky and has an NPV of 3...Ch. 11 - Prob. 9QCh. 11 - A firm has a 100 million capital budget. It is...
Ch. 11 - NPV Project L costs 65,000, its expected cash...Ch. 11 - IRR Refer to problem 11-1. What is the projects...Ch. 11 - MIRR Refer to problem 11-1. What is the projects...Ch. 11 - Prob. 4PCh. 11 - DISCOUNTED PAYBACK Refer to problem 11-1. What is...Ch. 11 - NPV Your division is considering two projects with...Ch. 11 - CAPITAL BUDGETING CRITERIA A firm with a 14% WACC...Ch. 11 - Prob. 8PCh. 11 - CAPITAL BUDGETING CRITERIA: ETHICAL CONSIDERATIONS...Ch. 11 - CAPITAL BUDGETING CRITERIA: MUTUALLY EXCLUSIVE...Ch. 11 - CAPITAL BUDGETING CRITERIA: MUTUALLY EXCLUSIVE...Ch. 11 - Prob. 12PCh. 11 - MIRR A firm is considering two mutually exclusive...Ch. 11 - CHOOSING MANDATORY PROJECTS ON THE BASIS OF LEAST...Ch. 11 - NPV PROFILES: TIMING DIFFERENCES An oil-drilling...Ch. 11 - Prob. 16PCh. 11 - CAPITAL BUDGETING CRITERIA A company has an 11%...Ch. 11 - NPV AND IRR A store has 5 years remaining on its...Ch. 11 - Prob. 19PCh. 11 - NPV A project has annual cash flows of 5,000 for...Ch. 11 - Prob. 21PCh. 11 - MIRR A project has the following cash flows: This...Ch. 11 - CAPITAL BUDGETING CRITERIA Your division is...Ch. 11 - BASICS OF CAPITAL BUDGETING You recently went to...
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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
- What is the equation to calculate the payback period?arrow_forwardwhat is pay back analysis in project managementarrow_forwardAccording to the Discounted Payback method, which project should be selected? What is the chief disadvantage of the Discounted Payback method? Why would anyone want to use the Discounted Payback method?arrow_forward
- How the regular payback periods and discounted payback periods for projects are calculated, after calculating NPV, IRR and MIRRarrow_forwardIt is good to compute first the additional benefits that a project can give and the additional cost incurred by implementing a project. This concept talks about a. Law of Supply and Demand b. Marginal Cost Benefit Analysis c. Time Value of Money d. Financial Ratiosarrow_forwardUsing image: a-1. What is the payback period for each project a-2. If you apply the payback criterion, which investment will you choose? b-1. What is the discounted payback period for each project? b-2. If you apply the discounted payback criterion, which investment will you choose? c-1. What is the NPV for each project? c-2. If you apply the NPV criterion, which investment will you choose? d-1. What is the IRR for each project? d-2. If you apply the IRR criterion, which investment will you choose? e-1. What is the profitability index for each project? e-2. If you apply the profitability index criterion, which investment will you choose? f. Based on your answers in (a) through (e), which project will you finally choose?arrow_forward
- What is the criteria to accept a project based on the net present value and the internal rate of return?arrow_forwardQuestion 5: Find the net present value, interpret whether the NPV suggests you should accept or reject the project, find the payback period, find the discounted payback period, find the profitability index, interpret whether the profitability index suggests you should accept or reject the project, find the internal rate of return, explain whether the internal rate of return can repay the cost of borrowing money to conduct the project, find the modified internal rate of return, and explain with the modified internal rate of return can repay the cost of borrowing money to conduct the project. All for the following situation: The initial capital outlay is $175,000, the first-year annual operating cash flow is projected to be 20,000 but should grow by 5% per year during each of the project's 30 years, the after-tax-salvage cash flow is guessed to be $500,000, the required rate of return on this project is 15.50% and the company weighted average cost of capital is 12.50%.arrow_forwardHow is the Rate of return is an intuitively familiar and understandable measure of project?arrow_forward
- What reinvestment rate is built into the NPV calculation? The IRR calculation?arrow_forwardCompute for the Modified Payback Period of opportunity #1. Compute for the Modified Payback Period of opportunity #2. Based on your computed modified payback periods, which opportunity is more favorable?arrow_forwardCalculating Net Present Value of a project is an application of which technique: a. SWOT Analysis.b. Future value.c. Cost Benefit Analysis. d. Discounting.e. Compounding.arrow_forward
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