Project Z has a cost of $ 50,000.00, its expected net cash flows are $11,000 per year for 8 years, and its cost of capital is 12 % (Hint: begin by constructing a time line).

Instructions:

a. Calculate the project's payback period.
b. Calculate the project's discounted payback period.
c. Calculate the project's NPV.
d. Given that IRR for project Z = 15%, compared to another project; project B that has IRR= 18%? Evaluate project Z.

You plan to invest your money in a project that has the following set of cash flows?

Year Cash Flows

0 -$2,500
1 300
2 1,500
3 1,100
4 1,000

a. Calculate the project's payback period.
b. Calculate the project's discounted payback period given that cost of capital is 12 %.
c. Calculate the project's NPV.
d. According to the results in the previous sections; will you invest your money in the project? Explain.

Posted Date: 2/14/2013 6:28:40 AM | Location : United States

Ask an Expert

Related Discussions:- Calculate the projects payback period, Assignment Help, Ask Question on Calculate the projects payback period, Get Answer, Expert's Help, Calculate the projects payback period Discussions

Write discussion on Calculate the projects payback period
Your posts are moderated

Write your message here..

Related Questions

Compare and contrast mutual and stockholder, Compare and contrast mutual an... Compare and contrast mutual and stockholder-owned savings and loan associations. A few savings and loan associations are owned by stockholders, just like commercial banks and ot

Outsourcing, Outsourcing Outsourcing is referring to purchase of parts ... Outsourcing Outsourcing is referring to purchase of parts from outside suppliers. Outsourcing is the external acquisition of services or components used in the production of go

Calculate the standard deviation of a portfolio , Aquaman stock has exhibit... Aquaman stock has exhibited a standard deviation in returns of 0.7, whereas Green Lantern stock has exhibited a standard deviation of 0.8. The correlation coefficient between the

Business venture, Project Plan for my new business venture is attached) ... Project Plan for my new business venture is attached) 1.     Your task is to take a look at every of the operational areas of the intended business, and verify  what financial i

Value of a warrant, Value of a Warrant: The market price of a warrant f... Value of a Warrant: The market price of a warrant fluctuates between minimum and maximum limits. When the current market price of the stock Ps is greater than the exercise pri

Essential features of a sound capital mix, ESSENTIAL FEATURES OF A SOUND CA... ESSENTIAL FEATURES OF A SOUND CAPITAL MIX A sound or an appropriate Capital structure should have the following essential features : highest possible use of leverage

Risk, You are still a consultant for the Excellent Consulting Group. You ha... You are still a consultant for the Excellent Consulting Group. You have completed the first assignment, developing and testing a forecasting method based on linear regression (Case

Return on investment , Return on Investment (ROI) In accounting it is a... Return on Investment (ROI) In accounting it is a measure of the earning power of an industries asset. A high return on investments is desirable. ROI is widely described as net

The characteristics of the website development project, P Company manufactu... P Company manufactures and sells a range of children's clothing through its retail shops and is currently designing a website in order to allow customers to purchase products onlin

Inventory is sometimes thought of as a necessary evil, Inventory is sometim... Inventory is sometimes thought of as a necessary evil.  Explain. Inventory ties up funds and these funds aren't earning an unambiguous return.  Some inventory is habitually nec