5. A project has the following after-tax total (or net) cash flows. Year After-tax total (or net) cash flow 1 $100,000 2 120,000 3 150,000 4 200,000 The required rate of return on the project is 15 percent. The initial investment (or initial cost or initial outlay) of the project is $320,000. a) Find the (regular) payback period of the project. b) Compute the discounted payback period of the project.

Your division is considering two investment projects, each of which requires an up-front expenditure of $25 million. You estimate that the cost of capital is 10% and that the investments will produce the following after-tax cash flows (in millions of dollars): Year Project A Project B 1 5 20 2 10 10 3 15 8 4 20 6 . What is the regular payback period for each of the projects? What is the discounted payback period for each of the projects? If the two projects are independent and the cost of capital is 10%, which project or projects should the firm undertake? If the two projects are mutually exclusive and the cost of capital is 5%, which project should the firm undertake? If the two projects are mutually exclusive and the cost of capital is 15%, which project should the firm undertake? What is the crossover rate? If the cost of capital is 10%, what is the modified IRR (MIRR) of each project?

Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) -$ 15,456 5,225 8,223 13,013 8,705 0 1 234 -$ 276,363 26,400 51,000 57,000 402,000 Whichever project you choose, if any, you require a 6 percent return on your investment. a. What is the payback period for Project A? Payback period b. What is the payback period for Project B? Payback period c. What is the discounted payback period for Project A? Discounted payback period

A project is expected to produce cash inflows of $5,000 for seven years. What is the maximum amount that can be spent on costs to initiate this project and still consider the project as acceptable, given an 11% discount rate? Select one: Oa. $15,884.15 Ob. $23,340.13 Oc. $25,900.63 O d. $23,560.98 Oe. $26,984.02

Assuming monetary benefits of a construction project at $50,000 per year, one-time costs (initial investment) of $15,000, recurring costs of $35,000 per year, a discount rate of 10 per cent, and a 4-year time horizon, calculate the net present value (NPV) of an information system's costs and benefits. Calculate the overall return on investment (ROI) of the project. During which year does break-even occur?   Use the NPV template provided (modify to suit your answer) and clearly display the NPV, ROI, and year in which payback occurs.   Write a paragraph explaining whether you would recommend investing in this project based on your financial analysis. Explain your answer referring to the NPV, ROI and payback for this project.   Discount Rate (10%) Year 0 - 1.0000 Year 1 -    .9091 Year 2 -    .8264 Year 3 -    .7513 Year 4 -    .6830

Perform a financial analysis for a project. Assume that the projected costs and benefits for this project are spread over 6 years as follows. Estimated costs are $1,100,000 in Year 0, and $50,000 each year in Years 1, 2, 3, 4, 5 and 6. Estimated benefits are $0 in Year 0, and $450,000 each year in Years 1, 2, 3, 4, 5 and 6. Use a 15% discount rate. Suppose the required payback period and discounted payback period are both 3 years. (1) Calculate the payback period (based on the original cash flows without discounting), and evaluate the project based on the payback method. (2) Calculate the discounted payback period (based on discounted cash flows), and evaluate the project based on the discounted payback method. (3) Evaluate the project using the NPV method, and explain whether you would recommend investing in this project.

Calculate the payback period, the discounted payback period and the NPV for the following project using a rate of 5%.                                                                                                          Time            Cash Flow                 0  - $53,000    1                                        $  21,000 2                                        $  21,000 3                                        $  21,000   NPV =   Payback =                                                               Discounted Payback =

Calculate the payback period, the discounted payback period and the NPV for the following project using a rate of 5%.                                                                                                                     Time                    Cash Flow                        0  - $63,000        $ 21,000 $ 21,000 $ 21,000 $ 21,000   Payback =                                                                   Discounted Payback =

Target Corporation (TGT) is considering a new delivery system that costs $194,875. Assume a required rate of return of 4.26% and the following cash flow schedule: Year 1: $46,608 .Year 2: $70,559 Year 3: $95,705 Year 4: $11,450 The project's discounted payback period (DPP) is closest to O A. 2.08 years. OB. 2.19 years. OC. 2.31 years. COD. 2.44 years.

3) Consider the following two projects:   Net Cash Flow Each Period Initial Outlay 1 2 3 4 Project A  $4,000,000 $2,003,000 $2,003,000 $2,003,000 $2,003,000 Project B   $4,000,000 0 0 0 $11,000,000   Calculate the net present value of each of the above projects, assuming a 14 percent discount rate. What is the internal rate of return for each of the above projects? Compare and explain the conflicting rankings of the NPVs and IRRs obtained in parts a and b above. If 14 percent is the required rate of return, and these projects are independent, what decision should be made? If 14 percent is the required rate of return, and the projects are mutually exclusive, what decision should be made?