Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
12th Edition
ISBN: 9781259144387
Author: Richard A Brealey, Stewart C Myers, Franklin Allen
Publisher: McGraw-Hill Education
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Chapter 5, Problem 8PS

Payback Consider the following projects:

Chapter 5, Problem 8PS, Payback Consider the following projects: a. If the <x-custom-btb-me data-me-id='2278' class='microExplainerHighlight'>opportunity cost</x-custom-btb-me> of capital is 10%, which

  1. a. If the opportunity cost of capital is 10%, which projects have a positive NPV?
  2. b. Calculate the payback period for each project.
  3. c. Which project(s) would a firm using the payback rule accept if the cutoff period is three years?
  4. d. Calculate the discounted payback period for each project.
  5. e. Which project(s) would a firm using the discounted payback rule accept if the cutoff period is three years?
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a. They payback period of project A is ___ years (round to two decimal places) The payback period of project B is ____ years. (round to two decimal places) According to the payback method, which project should the firm choose? b. The NPV of project A is $___ The NPV of project B is $___ c. The IRR of project A is ___ The IRR of project B is ___ d. Make a reccomendation
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Can you answer these in Excel (and show any calculation formulas). See the attached image for the information.  1. What is the payack period, NPV, IRR? 2. What happens to the NPV and IRR if initial capital goes up 30%? 3. How much would the selling price have to increase to compensate for 30% in capital costs to the original level in 1.? 4. What is your recomendation?
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Capital Budgeting Introduction & Calculations Step-by-Step -PV, FV, NPV, IRR, Payback, Simple R of R; Author: Accounting Step by Step;https://www.youtube.com/watch?v=hyBw-NnAkHY;License: Standard Youtube License