Discounted payback decision rule to evaluate project

Assignment Help Financial Management

Reference no: EM132057768

Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 12 percent, and that the maximum allowable payback and discounted payback statistics for your company are 2.5 and 3.0 years, respectively.

Time: 0 1 2 3 4 5

Cash flow –$229,000 $65,200 $83,400 $140,400 $121,400 $80,600 Use the discounted payback decision rule to evaluate this project. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Discounted payback years.

Reference no: EM132057768

Questions Cloud

What total assets turnover would be necessary : Isensee,Inc. has a total asset turnover of 1.2, a profit margin of 12%, and a debt ratio of .18 . The CFO wants to double the current return on equity

Explain how the management team will grow : Explain how the management team will grow and continually improve itself in conjunction with company growth projections.

What is the new company value per share now : Question 1: What is the new company's value per share now? Assuming 15% required return rate by potential investors.

Explain the major differences between cash flows : Explain the major differences between cash flows for replacement (cost cutting) projects versus cash flows for expansion projects.

Discounted payback decision rule to evaluate project : Cash flow –$229,000 $65,200 $83,400 $140,400 $121,400 $80,600 Use the discounted payback decision rule to evaluate this project.

Should sturgeon accept the project : Also calculate the NPV assuming Sturgeon has a 12% cost of capital Should Sturgeon Accept the project?

Which course of action would best serve justice : What action would be best for society in the long term?If I reveal this information, will my company find out and fire me?

Annual yield to maturity on bond : The current price of the bond is approximate $933.55. What's the annual yield to maturity on this bond?

What role did the competitive landscape play : Campbells has made significant changes to its SBUs. What role did the competitive landscape play in these Campbell's decision to make these changes?

User Account

All Pages