None (Payback and discounted payback period calculations) The Bar-None Manufacturing Co. manufactures fencepanels used in cattle feed lots throughout the Midwest. Bar-None's management is considering three investmentprojects for next year but doesn't want to make any investment that requires more than three years to recoverthe firm's initialinvestment. The cash flows for the three projects (Project A, Project B, and Project C) are as follows:a. Given Bar-None's three-year payback period, which of the projects will qualify for acceptance?b. Rank the three projects using their payback period. Which project looks the best using this criterion? Do youagree with this ranking? Why or why not?c. If Bar-None uses a discount rate of 10.6 percent to analyze projects, what is the discounted payback period foreach of the three projects? If the firm still maintains its three-year payback policy for the discounted payback.which projects should the firm undertake?Data tableYearProject AProject BProject C0$(1,050)$(9,800)$(5,500)15304,5001,50023503,5001,50031703,5003,5004603,5003,50054903,5003,500(Click on the icon in order to copy its contents into a spreadsheet.)two

Answered: (Payback and discounted payback period…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 15E: Gina Ripley, president of Dearing Company, is considering the purchase of a computer-aided...

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Ivanhoe Industries management is planning to replace some existing machinery in its plant. The cost of the new equipment and the resulting cash flows are shown in the accompanying table. The firm uses an 18 percent discount rate for projects like this. Should management go ahead with the project? Year Cash Flow 0 -$3,046,900 1 803,710 2 889,200 3 1,247,600 4 1,285,160 5 1,576,500 What is the NPV of this project? - NPV $?
Texas Farm Corporation is considering two projects of machinery that perform the same task. The required rate of return for these projects is $10%. The projects’ expected cash flows are as follows: Year Machine A ($) Machine B ($) 0 (17,000) (17,000) 1 8,000 2,000 2 7,000 5,000 3 5,000 9,000 4 3,000 9,500 Based on the above information, you are required to make an analysis for the decision of Capital Budgeting based on the following techniques: Net Present Value, NPV Profitability Index, PI
Wildhorse Industries management is planning to replace some existing machinery in its plant. The cost of the new equipment and the resulting cash flows are shown in the accompanying table. The firm uses an 18 percent discount rate for projects like this. Should management go ahead with the project? Year 0 1 2 3 4 5 Cash Flow -$3,485,400 871,710 896,700 1,104,400 1,340,360 1,450,600 What is the NPV of this project? (Enter negative amounts using negative sign e.g. -45.25. Do not round discount factors. Round other intermediate calculations and final answer to O decimal places, e.g. 1,525.) The NPV is $
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Management of Ivanhoe, Inc., is considering switching to a new production technology. The cost the required equipment will be $4,000,000. The discount rate is 13 percent. The cash flows that management expects the new technology to generate as follows: Years: CF: 1-2 0 3-5 $720,000 6-9 $1,670,000 A) Compute the payback and discounted payback periods for the project B) What is the NPV for the project? Should the firm go ahead with the project? C) What is the IRR, and what would be the decision based on the IRR?
1) XYZ Company is considering investing in a project that requires an initial investment of $200,000 for some machinery. There will be net inflows of $50,000 for the first two years, $35,000 in years three and four, and $50,000 in year five. Find the accounting rate of return for the machine. 3) A project requires an initial investment of $200,000 and is expected to generate the following net cash inflows: PROJECT A Year 1:60,000 Year 2:60,000 Year 3:80,000 Year 4:30,000 Year 5:30,000 Required: Compute the Pay back Period if the minimum desired rate of return is 10%. PVIF .909, .826, .751, .680, .623
The Sisyphean Company is planning on investing in a new project. This will involve the purchase of some new machinery costing $ 300,000. The Sisyphean Company expects cash inflows from this project as detailed below: Year 1: $ 131,579 Year 2: $ 131,579 Year 3: $ 131,579 Year 4: $ 131,579 The appropriate discount rate for this project is 18%. The internal rate of return ( IRR) for this project is closest to: Question content area bottom Part 1 A.27% B.16% C.20% D.31%
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