Comparing all methods. Given the following after-tax cash flow on a new toy for Tyler's Toys, find the projects payback period, NPV, and IRR. The appropriate discount rate for the project is 14%. If the cutoff period is 6 years for major projects, determine whether management will accept or reject the project under the three different decision models. (Click on the following icon in order to copy its contents into a spreadsheet.) Initial cash outflow: $11,700,000 Years one through four cash inflow: $2.925,000 each year Year five cash outflow: $1,170.000 Years six through eight cash inflow: $503,000 each year What is the payback period for the new toy at Tyler's Toys? years (Round to two decimal places) Under the payback period, this project would be (1). What is the NPV for the new toy at Tyler's Toys? (Round to the nearest cent) Under the NPV rule, this project would be (2). What is the IRR for the new toy at Tyler's Toys? % (Round to two decimal places) Under the IRR rule, this project would be (3). (1) O rejected (2) O rejected O accepted O accepted (Select from the drop-down menu.) (Select from the drop-down menu.) (Select from the drop-down menu) (3) O rejected O accepted

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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1. Comparing all methods. Given the following after-tax cash flow on a new toy for Tyler's Toys, find the project's payback period, NPV, and IRR. The appropriate discount rate for the project is 14%. If the cutoff period is 6 years for major projects, determine whether management will accept or reject the project under the three
different decision models.
(Click on the following icon in order to copy its contents into a spreadsheet.)
Initial cash outflow: $11,700,000
Years one through four cash inflow: $2,925,000 each year
Year five cash outflow: $1,170,000
Years six through eight cash inflow: $503,000 each year
What is the payback period for the new toy at Tyler's Toys?
years (Round to two decimal places.)
Under the payback period, this project would be (1)
What is the NPV for the new toy at Tyler's Toys?
$
(Round to the nearest cent.)
Under the NPV rule, this project would be (2)
What is the IRR for the new toy at Tyler's Toys?
% (Round to two decimal places.)
Under the IRR rule, this project would be (3)
(1) O rejected
O accepted
(2) O rejected (3) ○ rejected
O accepted
00
(Select from the drop-down menu.)
(Select from the drop-down menu.)
(Select from the drop-down menu.)
O accepted
Transcribed Image Text:1. Comparing all methods. Given the following after-tax cash flow on a new toy for Tyler's Toys, find the project's payback period, NPV, and IRR. The appropriate discount rate for the project is 14%. If the cutoff period is 6 years for major projects, determine whether management will accept or reject the project under the three different decision models. (Click on the following icon in order to copy its contents into a spreadsheet.) Initial cash outflow: $11,700,000 Years one through four cash inflow: $2,925,000 each year Year five cash outflow: $1,170,000 Years six through eight cash inflow: $503,000 each year What is the payback period for the new toy at Tyler's Toys? years (Round to two decimal places.) Under the payback period, this project would be (1) What is the NPV for the new toy at Tyler's Toys? $ (Round to the nearest cent.) Under the NPV rule, this project would be (2) What is the IRR for the new toy at Tyler's Toys? % (Round to two decimal places.) Under the IRR rule, this project would be (3) (1) O rejected O accepted (2) O rejected (3) ○ rejected O accepted 00 (Select from the drop-down menu.) (Select from the drop-down menu.) (Select from the drop-down menu.) O accepted
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