Considering capital expenditure

Assignment Help Financial Management

Reference no: EM131300250

Jordan Enterprises is considering a capital expenditure that requires an initial investment of ?$48,000 and returns? after-tax cash inflows of ?$8,144 per year for 10 years. The firm has a maximum acceptable payback period of 8 years.

A) The payback period for this project is how many years?

B) Should the company accept the? project? (Select best answer)

a) The company should reject the project since the payback period is less than the maximum

b) The company should reject the project since the payback period is less than the number of years of the?after-tax cash flows.

c) The company should accept the project since the? after-tax cash flows occur for more years than the maximum acceptable payback.

d) The company should accept the project since the payback period is less than the maximum.

e) The company should reject the project since the? after-tax cash flows occur for more years than the maximum acceptable payback.

Reference no: EM131300250

Questions Cloud

Fixed rate semi-annual pay debt : Company X has a $ 100 million, 2 year, 6% fixed rate semi-annual pay debt. Payments are actual count over a 360-day year. The company expects interest rates to fall and would prefer to have a floating rate debt. A $100 million, two year 5.5% semi-ann..

The required initial net working capital investment : A proposed cost-saving device has an installed cost of $658,000. The device will be used in a five-year project but is classified as three-year MACRS (MACRS Table) property for tax purposes. What level of pretax cost savings do we require for this pr..

Zero coupon bond with a two year maturity : Which has a longer Macaulay’s duration: a zero coupon bond with a two year maturity, or a two year maturity coupon bond that pays 6 percent coupon interest if they both carry a 6 percent market yield? Explain your reasoning.

Sensitivity of your base-case npv to changes in fixed costs : You are considering a new product launch. The project will cost $1,232,500, have a five-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 310 units per year; price per unit will be $19,300, variable c..

Considering capital expenditure : Jordan Enterprises is considering a capital expenditure that requires an initial investment of ?$48,000 and returns? after-tax cash inflows of ?$8,144 per year for 10 years. The firm has a maximum acceptable payback period of 8 years.

Reduced or eliminated mutual fund coverage : Which of the following have reduced or eliminated mutual fund coverage?

What was her percentage of total return on this investment : Shelby purchased 100 shares of ABCD Growth fund for $10.00 per share. She had income dividends of $15, capital gain distributions of $35, and a capital gain of $120 in the year she sold her shares. What was her percentage of total return on this inve..

What is the net cash flow of the project each year : H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,670,000. The fixed asset falls into the three-year MACRS class (MACRS Table). The project is estimated to generate $2,340,000 in..

Calculate the overall roi for the new dental office system : You have recently started a consulting assignment where you have been asked to prepare a short economic analysis for a problem that your client is facing. The client is a dental office. Calculate the overall ROI for the new dental office system. What..

User Account

All Pages