Regular payback period, Financial Management

The director of capital budgeting for a firm has recognized two mutually exclusive projects, A and B, with the following expected net cash flows:

 

                                                                                                   Expected Net Cash Flows

                                                                Year                       Project A                                             Project B

                                                                  0                              ($100)                                 ($100)

                                                                  1                                  70                                                     10

                                                                  2                                  50                                                     60

                                                                  3                                  20                                                     80

 

Together of the projects have a cost of capital of 14 percent.

 

(i) What is the regular payback period (in years) for Project B?

(ii) What is Project A's net present value (NPV)?

 

 

 

 

 

 

 

 

 

Posted Date: 3/26/2013 7:54:58 AM | Location : United States







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

Write discussion on Regular payback period
Your posts are moderated
Related Questions
Provide an argument for including or not current liabilities in the cost of capital calculation.

How does a preemptive right protect the interests of existing stockholders? A preventive right protects the interests of existing stockholders by giving them the opportunity to

name the concept which increases the return on equity shares by changing the capital structure of the co.

How do we estimate expected incremental cash flows for a proposed capital budgeting project? We calculate expected incremental cash flows for a planned project by estimating the

Q. Show Financial Management Process? The financial management process begins with the financial planning and decisions. While implementing these decisions, the firm has to acq

What are compensating balances and why do banks require them from some customers?  Under what circumstances would banks be most likely to impose compensating balances? Compensa

challenges that the finance manager face in fulfilling the managerial function

Q. What is Risk mitigation and how it is monitored? 1. When managing risks, there are several risk strategy options to be considered. Risk may be avoided entirely, transferred

Global Economy: The size of the world stock market grew steadily in the 1970s and 1980s and crossed the $12 trillion figure in 1993. The share of the US market decreased tremen

What are the options available for growth Joint venture   A joint venture is when a separate company is formed, in which every member holds an equity st