What is the payback period for each project

Assignment Help Financial Management
Reference no: EM131186557

Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$ 344,000 –$ 49,000 1 51,000 24,600 2 71,000 22,600 3 71,000 20,100 4 446,000 15,200 whichever project you choose, if any, you require a 15 percent return on your investment. a-1 What is the payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Payback period Project A year’s Project B years a-2 If you apply the payback criterion, which investment will you choose? Project A Project B b-1 What is the discounted payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Discounted payback period Project A year’s Project B year’s b-2 If you apply the discounted payback criterion, which investment will you choose? Project A Project B c-1 What is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) NPV Project A $ Project B $ c-2 If you apply the NPV criterion, which investment will you choose? Project A Project B d-1 What is the IRR for each project? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) IRR Project A % Project B % d-2 If you apply the IRR criterion, which investment will you choose? Project A Project B e-1 What is the profitability index for each project? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.) Profitability indexes Project A Project B e-2 If you apply the profitability index criterion, which investment will you choose? Project A Project B f. Based on your answers in (a) through (e), which project will you finally choose?

Reference no: EM131186557

Questions Cloud

Describes the work of art : Describes the work of art, work produced of Ren Yi during the CHINESE ART in THE AGE of IMPERIALISM.- There should be clarity of presentation.
Product review for endpoint protection solutions : Red Clay Renovations (the "client") has requested that your company research and recommend an Endpoint Protection Platform which will provide host-based protection for the laptop PC's used by its construction managers and architects. These employe..
The modigliani and miller hypothesis : The Modigliani and Miller hypothesis does NOT work in the "real world" because:
Different models of project management : Understanding the different models of project management. How is projectized different from managing and controlling task.
What is the payback period for each project : Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$ 344,000 –$ 49,000 1 51,000 24,600 2 71,000 22,600 3 71,000 20,100 4 446,000 15,200 whichever project you choose, if any, you require a 15 percent return on ..
What is times-interest-earned ratio : Bauer Inc. has $2,050 of assets and $2,995 of sales. Its operating costs are $2,701, including $31 of lease payments, $450 of depreciation, and $500 of amortization charges. Its total current liabilities are $315, consisting of $265 of accruals and $..
The development of a strategic analysis : Strategic Analysis :- Identification of e-sonic's industry based on the North American Industry Classification System (NAICS).
Developing struts application : What are the reasons for an error message not being displayed while developing struts application?
Create a bus matrix based : Imagine that you are a senior data warehouse architect for LECAL Corporation.  Your company has been contracted by the U.S. Department of Education to develop a data warehouse which will track student performance on a series of planned nationwide ..

Reviews

Write a Review

Financial Management Questions & Answers

  Modified accelerated cost recovery system

The following facts are presented on an opportunity to invest in Machine A: Cost of equipment is $200,000. The machine has an expected 4-year useful life; it will be depreciated according to the 3-year Modified Accelerated Cost Recovery System (MACRS..

  The optimal capital structure when financial distress costs

An unlevered firm, Marshall Inc., has a constant EBIT of $1,500,000 per year in perpetuity. It is considering the use of some debt financing to repurchase shares. What is Marshall’s market value and the WACC before any debt is taken on? In M&M’s case..

  What is the present value of the annuity

What is the present value of the following annuity? $1,021 every half year at the beginning of the period for the next six years, discounted back to the present at 8.93 percent per year, compounded semi annually?

  Constant annual dividend

Greener Grass Co. pays a constant annual dividend of $1 a share and has 1,000 shares of common stock outstanding. The company: must always show a current liability on its balance sheet of $1,000 for dividends payable.

  What should be current stock price

Ranyard's beta is 1.13, and the last dividend per share paid was $4.21. The market risk premium is estimated to be 7.56%, and the real rate of interest is 2.04%. The liquidity risk premium is 0.7%. Analysts expect the company to grow at a rate of 3.5..

  What is the tax shield and cash flows

You must evaluate a proposal to buy a machine. The cost of the machine including shipping, modification and installation costs is 100,000. The machine will be depreciated using MACRS 3 year class life 33%, 45%,,15%7%) sold after 3 years for 12,000. T..

  Who is currently supervising group of insurance adjusters

You are invited to advice a Group Sales Manager (GSM) who is currently supervising a group of insurance adjusters who are highly experienced confidence in their abilities, particularly on taking up new assignments. They seem to that any new accomplis..

  The value of portfolio of treasury bonds

Explain why each of the independent statements below is false. A good explanation should be between two and four sentences for each part. A mutual fund manager is concerned that the value of a portfolio of Treasury Bonds (average maturity = 15 years)..

  Describe the modified internal rate of return

Describe the Modified Internal Rate of Return (MIRR) method for determining a capital budgeting project's desirability. What are MIRR's strengths and weaknesses?

  Cultural values-extra cash to pay special one-time dividend

Electronic Timing, Inc., (ETI), is a company founded 15 years ago by electronics engineers Tom Miller and Jessica Kerr. ETI manufactures integrated circuits to capitalize on the complex mixed-signal design technology and has recently entered the mark..

  Remaining divisions have to contribute every month

Merritt Manufacturing needs to accumulate $15 million to retire a bond issue that matures in 12 years. The firm's manufacturing division can contribute 100,000$ per quarter to an account that will pay 2% quarterly. How much will the remaining divisio..

  Expanding rapidly-currently needs to retain all of earning

Microtech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Microtech to begin paying dividends, beginning with a dividend of $0.75 coming 3 years from toda..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd