Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN: 9781305970663
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
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Question
Chapter 19, Problem 19E
To determine
Calculate the payback period for the given investment.
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A real estate investment has the following expected cash flows: Year Cash Flows 1 $15,000 2 14,000 3 19,000 4 21,000 The discount rate is 6 percent. What is the investment’s present value? Round your answer to 2 decimal places; for example 2345.25.
An investment project that gives cash flow for the first year $ 10,000 and the second $ 15,000; The interest rate is 8.5%; The present value of the investment is equal to (to the nearest decimal place):
Select one:
a. $ 25,000
b. $ 21929
c. $ 30,000
d. $ 20,000
An investment project provides cash inflows of $740 per year for 9 years.
What is the project payback period if the initial cost is $1,480?
A. 2.00 years
B. 2.02 years
C. 1.90 years
D. 1.94 years
E. 2.04 years
What is the project payback period if the initial cost is $4,958?
A. 6.70 years
B. 6.77 years
C. 6.37 years
D. 6.83 years
E. 6.50 years
What is the project payback period if the initial cost is $7,400?
A. 3.01 years
B. Never
C. 4.95 years
D. 5.25 years
E. 1.35 years
Chapter 19 Solutions
Cornerstones of Cost Management (Cornerstones Series)
Ch. 19 - Explain the difference between independent...Ch. 19 - Explain why the timing and quantity of cash flows...Ch. 19 - Prob. 3DQCh. 19 - Prob. 4DQCh. 19 - What is the accounting rate of return?Ch. 19 - What is the cost of capital? What role does it...Ch. 19 - Prob. 7DQCh. 19 - Explain how the NPV is used to determine whether a...Ch. 19 - Explain why NPV is generally preferred over IRR...Ch. 19 - Prob. 10DQ
Ch. 19 - Prob. 11DQCh. 19 - Prob. 12DQCh. 19 - Prob. 13DQCh. 19 - Prob. 14DQCh. 19 - Prob. 15DQCh. 19 - Jan Booth is considering investing in either a...Ch. 19 - Prob. 2CECh. 19 - Carsen Sorensen, controller of Thayn Company, just...Ch. 19 - Manzer Enterprises is considering two independent...Ch. 19 - Keating Hospital is considering two different...Ch. 19 - Prob. 6CECh. 19 - Prob. 7ECh. 19 - Prob. 8ECh. 19 - Each of the following scenarios is independent....Ch. 19 - Roberts Company is considering an investment in...Ch. 19 - NPV A clinic is considering the possibility of two...Ch. 19 - Refer to Exercise 19.11. 1. Compute the payback...Ch. 19 - Buena Vision Clinic is considering an investment...Ch. 19 - Consider each of the following independent cases....Ch. 19 - Gina Ripley, president of Dearing Company, is...Ch. 19 - Covington Pharmacies has decided to automate its...Ch. 19 - Postman Company is considering two independent...Ch. 19 - Prob. 18ECh. 19 - Prob. 19ECh. 19 - Prob. 20ECh. 19 - Assume there are two competing projects, X and Y....Ch. 19 - Prob. 22ECh. 19 - Assume that an investment of 100,000 produces a...Ch. 19 - Prob. 24PCh. 19 - Prob. 25PCh. 19 - Prob. 26PCh. 19 - Kent Tessman, manager of a Dairy Products...Ch. 19 - Friedman Company is considering installing a new...Ch. 19 - Okmulgee Hospital (a large metropolitan for-profit...Ch. 19 - Mallette Manufacturing, Inc., produces washing...Ch. 19 - Jonfran Company manufactures three different...Ch. 19 - Prob. 32P
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Similar questions
- Assume that an investment of 100,000 produces a net cash flow of 60,000 per year for two years. The discount factor for year 1 is 0.89 and for year 2 is 0.80. The NPV is a. 0 b. 6,800 c. 1,400 d. (4,000)arrow_forwardAssume a $55,000 investment and the following cash flows for two alternatives. Year Investment A Investment B $ 15,000 $35,000 1 2 25,000 10,000 20,000 15,000 25,000 3 4 20,000 a. Calculate the payback for investment A and B. (Round your answers to 2 decimal places.) Investment A years Investment B years b. Which investment would you select under the payback method? O Investment A O Investment B c. If the inflow in the fifth year for Investment A was $20,000,000 instead of $20,000, would your answer change under the payback method? Yes O Noarrow_forwardCalculate the future value of an investment if the annual interest rate is 9%, number of payments is 30, and each payment of $1000 is made at the end of the year. A. $102,893 B. $136,308 C. $108,212 O D. $98,234arrow_forward
- Compute the payback perlod for an Investment with the following net cash flows. (Round your answer to one decimal place.) Net Cash Flows per Year Cumulative Net Cash Flows $ (101,000) $ (101,000) (90,900) (70,800) Year Initial investment 1. 2. 3. 5. 6. Payback period 10,100 20,100 20,100 26,640 40,100 40,100 years (50,700) (24,060) 16,040 56,140arrow_forwardMendez Company has identified an investment project with the following cash flows. Year Cash Flow 1 $ 810 2 1,110 3 1,370 4 1,500 a. If the discount rate is 11 percent, what is the present value of these cash flows? b. If the discount rate is 17 percent, what is the present value of these cash flows? c. If the discount rate is 25 percent, what is the present value of these cash flows?arrow_forwardAn investment will pay $600 at the end of each of the next 2 years, $700 at the end of Year 3, and $1,000 at the end of Year 4. What is its present value if other investments of equal risk earn 6 percent annually? a. $1,821.82 b. $1,913.83 c. $2,297.07 d. $2,479.86 e. $2,735.85arrow_forward
- A project has the following cash flows. What is the internal rate of return? Years Cash flow -$46.800 11.260 18.220 15.950 4. 13,560 O 9.75 percent O 10.28 percent O 10.60 percent O 10.67 percent O 11.23 percent 2 3.arrow_forwardA project has the following cash flows. What is the payback period? Year 0 1 2 3 Cash Flow - $5000 $2,700 $3,300 $1,400 a. 1.84 years b. 1.39 years c. 1.70 years d. 1.88 years e. 1.76 yearsarrow_forwardCompute the payback period for an investment with the following net cash flows. (Round your answer to one decimal place.) Net Cash Flows Cumulative Net per Year $ (101,000 ) 10,100 20,100 20,100 26,640 40,100 40,100 Cash Flows $ (101,000) (90,900) (70,800) (50,700) (24,060) 16,040 56,140 Year Initial investment 1. 2. 3. 5. 6. Payback period yearsarrow_forward
- A $670 investment has the following expected cash returns: Year Net Cash Flow $500 100 200 1 2 3 Compute the internal rate of return for this project. Round your answer to two decimal places. %arrow_forwardA project requires an investment of $1000 and generates a cash flow of $1000 in 1 year and another $1000 in 5 years. What is the IRR? A. 16.87% B. 25.13% C. 32.47% D. 38.16%arrow_forwardA project has cash flows across time as follows. Year 0. 2 4 6. Cash -190 20 30 50 80 150 100 40 Flow The project's payback is ОаЗ years. O b. 4.1 years. OC.4 years. d. 3.700 years.arrow_forward
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