What is the payback period - the discounted payback period

Assignment Help Corporate Finance
Reference no: EM13200389

1.What is the payback period for the following set of cash flows?

Year

Cash Flow

0

-$ 7,700       

1

1,200       

2

2,200       

3

2,900       

4

1,600       

 

2. An investment project has annual cash inflows of $4,400, $5,500, $6,300, and $7,600, and a discount rate of 11 percent.

What is the discounted payback period for these cash flows if the initial cost is $7,500?

3. A firm evaluates all of its projects by applying the IRR rule.

Year

              Cash Flow

0

-$29,273        

1

23,000        

2

13,000        

3

5,000        

 

a. Determine the IRR for the above project.

b. If the required return is 24 percent, should the firm accept the above project?

4. A firm evaluates all of its projects by using the NPV decision rule.

Year

                Cash Flow

0

-$28,000      

1

24,000      

2

15,000      

3

11,000      

a. At a required return of 27 percent, what is the NPV for this project?

b. At a required return of 37 percent, what is the NPV for this project?

5. For the following set of cash flows,

Year

Cash Flow

0

-$6,300           

1

3,700           

2

 4,900           

3

5,400          

a. What is the NPV at a discount rate of 0 percent?

b. What is the NPV at a discount rate of 14 percent?

c. What is the NPV at a discount rate of 22 percent?

d. What is the NPV at a discount rate of 27 percent?

6. Mahjong, Inc., has identified the following two mutually exclusive projects:

Year

Cash Flow (A)

Cash Flow (B)

0

-$36,300       

-$36,300       

1

18,600       

6,400       

2

14,100       

12,900       

3

11,600       

19,400       

4

8,600       

23,400      

 

a. What is the IRR for Project A?

b. What is the IRR for Project B?

c. If the required return is 11 percent, what is the NPV for Project A?

d. If the required return is 11 percent, what is the NPV for Project B?

e. At what discount rate would the company be indifferent between these two projects?

7. A project has the following cash flows:

Year

Cash Flow

0

$64,900       

1

-30,900       

2

-48,800      

a. What is the IRR for this project?

b. What is the NPV of this project, if the required return is 8.5 percent?

c. NPV at 0 percent?

d. NPV at 17 percent?

8. A project that provides annual cash flows of $12,200 for 6 years costs $51,613 today.

a. If the required return is 14 percent, what is the NPV for this project?

b. Determine the IRR for this project.

Reference no: EM13200389

Questions Cloud

Can friendly finance succeed in a suit against suburban : Evergreen Landscapers, Inc., owes Friendly Finance Company $5,000. Evergreen enters into a contract with Suburban Office Park under which Evergreen promises to maintain the landscaping on Suburban's property.
How useful are comparisons between real gdps of countries : how does the replacement of home production with production through markets affect real GDP. how does it affect the usefulness of comparisons of real GDP per capita at the end of the twentieth century with the same measure at the beginning of the ..
How high is the balloon : The angle of elevation of a balloon from an observer A is 30 degrees and from observer B, 45 degrees. If the distance between A and B is 800 + 800√3 meters, how high is the balloon?
Indicate the effect on the price and quantity exchanged : Market for Airline tickets: Explain what will happen in the market for U.S. domestic flight airline tickets, for each of the events shown below. Remember to indicate which curve will shift (demand or supply) and indicate the effect on the price.
What is the payback period - the discounted payback period : What is the payback period for the following set of cash flows and what is the discounted payback period for these cash flows if the initial cost is $7,500?
What was the percent increase to the nearest tenth : Search Results for "the price for a share of XYZ stock went from $32 to $37 in one month. what was the percent increase to the nearest tenth of a percent ?"
What is the instantaneous velocity of the car : The position function of a car moving along a mountain road is given by the function f(t) = t3 - 2t2 + 4 kilometers, where t is in hours. What is the instantaneous velocity of the car at t = 2 hours?
Find the dimensions of the package of maximum volume : A package can have a maximum combined length and girth of 108 inches. Find the dimensions of the package of maximum volume that can be sent. (assume that the cross section is a square)
How fast is the distance between the bicycle and balloon : How fast is the distance between the bicycle and balloon increasing 4 sec later?

Reviews

Write a Review

 

Corporate Finance Questions & Answers

  Determine markup percentage

A production corporation produces and sells 40,000 units of a single product. Variable costs total $80,000 & fixed costs total $120,000. If unit is sold for dollar 8,

  Define hris

Write a memo to convince the management to invest in a new HRIS. Imagine you are the head of the HR department in a firm. Your department plans to propose an HRIS initiative to management.

  How many ties and scarfs should the firm

Computation of quantity to obtain required profit per process - How many ties and scarfs should the firm make to maximize its profit if they obtain $3?

  Prepare the liquidators final statement of account

The liquidator's remuneration was agreed at $2 % on the amount realized (including cash) and 2% on the amount paid to the unsecured credito$ You are required to prepare the liquidator's final statement of account.

  Prepare financial statements from adjusted trial balance

Transfer these accounts and balances to a spreadsheet worksheet and prepare an Income statement, a Classified Balance Sheet, and a Statement of Retained Earnings all in good form using proper headings for each statement.

  Questions related to stock exchange

Theory questions regarding stock exchange - Is the control issue likely to be of more importance to stockholders of publicly owned or closely held firms? Explain

  Explain the overall weighted cost of capital

In April 1988, the VP of project finance at the Hilton Company, Christopher Nassetta, was creating recommendations for discount rates that should be used to estimate each of the company's three divisions.

  Estimate the present value of the cash flows

Estimate the NPV of the coffee shop without the additional book sales and estimate the present value of the cash flows accruing from the additional book sales

  Compute the company''s after-tax cost of borrowing

DuPont reports in a recent balance sheet $598 million of 5.25 percent notes payable due in 2016. The company's income tax rate is approximately 19 percent.

  Discuss stock market crash

Discuss and explain at least three reasons that can be learned from the stock market crash of 2002 in the applied business world?

  Find the after-tax rates of return

Newhouse Corporation reported 50 million dollar of net income and 810 million dollar of retained earnings. The previous retained earnings were 780 million dollar.

  Determine stock based on firm''s dividend yield

Determine stock based on firm's dividend yield and capital gain yield - Evaluation of two different options for stock purchase.

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