Calculate project payback period

Assignment Help Finance Basics
Reference no: EM132576340

Year Project A Project B 0 R -10 000 R -10 000 1 6 500 3 500
2 3 000 3 500

3 3 000 3 500

4 1 000 3 500

NB: Each project has a cost of R10 000, and the cost of capital for each is 12 percent

1. Calculate each project's payback period, net present value (NPV), internal rate of return (IRR), and profitability index (PI).

2. Which project or projects should be accepted if they are independent?

3. Which project should be accepted if they are mutually exclusive?

4. How might a change in the cost of capital produce a conflict between the NPV and IRR rankings of these two projects? Would this conflict exist if r were 5 percent? (Hint: Plot the NPV profiles.)

5. Why does the conflict exist?

Reference no: EM132576340

Questions Cloud

Make the necessary journal entries until December : The machine and maintenance service can be sold separately. Make the necessary journal entries until 31 December 2019
Essay about differences between schools and university : Essay - Need a contrast essay about differences between schools and university, also I want it to be done by point by point method
Personal mentoring and coaching strategies and techniques : Evaluate your personal mentoring and coaching strategies and techniques.
What will be the respective shares of S : Upon liquidation, cash of P300,000 becomes available for distribution to the partners. In the final distribution, what will be the respective shares of S
Calculate project payback period : Calculate each project's payback period, net present value (NPV), internal rate of return (IRR), and profitability index (PI).
Explain the role of inflation in cash flows : Explain the role of inflation in cash flows. Focus specifically on the impact of inflation on the cash flows of a project investment
What is relational model : What is a relational Model? What is a Primary Key?
Discuss all of the deviance theories : From all of the deviance theories discussed in the text and in the videos, which one do you think explains most effectively the existence of deviance in society
Prepare Kingbird journal entries : Kingbird Inc., began work on a $7,500,000, non-cancellable contract in 2020 to construct an office building. Prepare Kingbird journal entries

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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