What is discounted payback period for each of three? project

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Reference no: EM132764427

The? Bar-None Manufacturing Co. manufactures fence panels used in cattle feed lots throughout the Midwest. ? Bar-None's management is considering three investment projects for next year but? doesn't want to make any investment that requires more than three years to recover the? firm's initial investment.

The cash flows for the three projects? (Project A, Project? B, and Project? C) are as? follows: 

Year,        Project A,          Project B,          Project C

0 ?           $(900?) ?            $(9,000?)              $(5,500?)

1           650                  6,000                 1,800

2          400                  2,000                 1,800

3            180                  2,000               3,000

4                80              2,000               3,000

5             430                 2,000              3,000

Problem 1: Given? Bar-None's three-year payback? period, which of the projects will qualify for? acceptance?

Problem 2: Rank the three projects using their payback period. Which project looks the best using this? criterion? Do you agree with this? ranking? Why or why? not?

Problem 3: If? Bar-None uses a discount rate of 10.1 percent to analyze? projects, what is the discounted payback period for each of the three? projects? If the firm still maintains its? three-year payback policy for the discounted? payback, which projects should the firm? undertake?

Reference no: EM132764427

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