(gnore income taxes in this problem.) Your Company is considering an investment that has the following data:Year25Investment$20,000Cash inflow$12,000$12,000$15,000$4,000$4,000In what year does the payback period for this investment occur?Year 2.Year 3.Year 4.Year 5.

Payback is the time taken to recover the initial outlay of investment through cash inflows generated…

(gnore income taxes in this problem.) Your Company is considering an investment that has the following data: Year 3 Investment $20,000 Cash inflow $12.000 $12,000 $15,000 $4,000 $4,000 In what year does the payback period for this investment occur? Year 2. Year 3. Year 4. Year 5.

(gnore income taxes in this problem.) Your Company is considering an investment that has the following data: Year 3 Investment $20,000 Cash inflow $12.000 $12,000 $15,000 $4,000 $4,000 In what year does the payback period for this investment occur? Year 2. Year 3. Year 4. Year 5.

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 15PROB

See similar textbooks

Related questions

Q: A company is considering a project that has the following cash flows with a WACC of 10.00%. What is…

A: The discounted payback period calculates the time taken to recover the initial cost after…

Q: Wells, Inc., has identified an investment project with the following cash flows. Year Cash Flow $…

A: Future Value: To calculate the future value of the current value we have to adjust the current value…

Q: Calculate the Payback Period using the following Information All figures are in OMR Initial…

A: The payback period is used in the case of capital budgeting decisions in order to decide whether to…

Q: An investment of 199 dollars generates after tax cash flows of 40 dollars in Year 1, 80 dollars in…

A: Net Present Value (NPV) is one of the capital budgeting technique which is used to analyze the…

Q: A company has two investment possibilities, with the following cash inflows: If the firm can earn 7…

A: We need to use the concept of time value of money to solve the question. According to the concept of…

Q: please solve the question in detail and without using excel sheets or equations rather use…

A: The modified internal rate of return (MIRR) assumes that positive cash flows are reinvested at the…

Q: The cash flows for your firm's project are provided in the table below. When initially finding the…

A: MIRR i.e. modified internal rate of return is the interest rate earned by project when the cash…

Q: CDE Corporation is considering an investment that has the following cash flows: Now investment…

A: The question is based on the concept of Financial Management.

Q: year. The same helps the company generate cash for working of t ing expenses, which is usually for a…

A: Companies try to increase the sales in the future so that good return on investment and better…

Q: Fuente, Inc., has identified an investment project with the following cash flows. Year…

A: We can solve the question using the concept of time value of money. According to the concept of time…

Q: 2. Ajax, Inc. has a budget of S1,200,000 for projects this year. To raise that amount of money, they…

A: Weighted average cost of capita is commonly used as the discount rate for future cash flows in DCF…

Q: Find the profitability index for Oman Air conditioner Company if the initial investment is 4000 OMR…

A: Present value of cash inflows = Cash inflows x present value factor (5%, 4 years) =…

Q: Find the profitability index for Oman Air conditioner Company if the initial investment is 4000 OMR…

A: Profitability index is a part of capital budgeting decision where present value of cash inflows and…

Q: Assuming a 1-year, money market account investment at 3.98 percent (APY), a 3.13% inflation rate, a…

A: given information money market account investment = 3.98% inflation rate = 3.13% marginal tax = 10%…

Q: Your Corporation is investigating an investment in equipment that would have a useful life of 8…

A: Let the annual cash inflow = A n = 8 years r = 6% Initial investment (X) = $401414

Q: Justine Global Info Tech records the following cash flows at the end of each year for a project. If…

A: Present Value is the current value of all the cash flows which is to be received in the future which…

Q: You expect ATM Corporation to generate the following free cash flows over the next five years:…

A: A model that helps to evaluate the value of the firm by discounting the future cash flow of the firm…

Q: Project B cost $4,900 and will generate after-tax net cash inflows of $400 in year one, $1,200 in…

A: Net present value is used to analyze profitability and translate future cash flows for capital…

Q: please show your work, do not use excle 7. A company that makes clutch disks had the cash flows…

A: Internal rate of return is the rate at which net present value of cash flow is 0. Modified IRR is…

Q: The cash flow for a company for their investment account is shown in the table below: Cash Year Cash…

A: IRR is the rate at which NPV of the project is zero. According to the question given, year cash…

Q: For example, if you a simple average of 5 year of either income or cash flow of: year 1 100 year2…

A: There are various methods of valuing business. One such method is discounted cash flow method or Npv…

Q: A company forecasts free cash flow of $400 at Year 1 and $600at Year 2; after Year 2, the FCF grow…

A: The cash generated over and above required by business operations and capital expenditure is called…

Q: (Ignore income taxes in this problem.) Your Company is considering an investment proposal in which a…

A: Given: Working capital investment required =$70000 Cash inflows per year =$7500No. of years =7…

Q: (Ignore income taxes in this problem.) Your Company is considering an investment that has the…

A: Payback period: Payback period is the length of time in which an investment reaches its break-even…

Q: (Ignore income taxes in this problem.) Your Company is considering an investment proposal in which a…

A: The net present value (NPV) is calculated by a company to make a decision on whether to accept the…

Q: A company is considering a project that has the following cash flow data. What is the project's…

A: Payback period = Initial investment/cash inflows each year Payback period is the time period taken…

Q: Lannie Industries is planning its operations for next year. Lannie Bells, the CEO, wants you to…

A: SOLUTION- FORECASTED SALES = LAST YEAR SALES * SALES GROWTH RATE .…

Q: The manager of a production system expects to spend $100,000 the first year with amounts increasing…

A: Expenditure in first year = 100,000 Increase in expenditure per year = 10,000 Income in first year…

Q: Mojave Corporation was looking at an investment that would generate $5,000 in net income before…

A: WORKING NOTE 1) tax @21%(3000*21%)=630

Q: If the investment is expected to earn revenue of P4,000,000, with cash expenses amounting to…

A: Payback period is the period which is required for the investment or the project to get the…

Q: Justine Global Info Tech records the following cash flows at the end of each year for a project. If…

A: Capital budgeting: It is a method of evaluating the projects which required huge investments and…

Q: XYZ, Co. is considering the purchase of a new building that will allow them to expand their market.…

A: In taking of Capital Budgeting decision we consider the free cash flow from project. meaning of free…

Q: The Fleming Manufacturing Company is considering a new investment. Financial projections for the…

A: net operating income =Revenue-cost of goods sold

Q: 1. An opportunity arises for company ABC which requires an initial investment of $800,000 now. The…

A: Discounted Payback Period = Years before full recovery + (unrecovered cost at the start of the year/…

Q: Dalvi Incorporated is considering a new Investment. The table below lists the cash flows. Year Cash…

A: The payback period is the time period in which the Initial amount is fully recovered from future…

Q: You are interested buying a business and the current owner is asking $180,000 for it. You require a…

A: Interest refers to the amount charged by the lender on the lent amount. The borrower of the loan is…

Q: An investment is expected to produce the following annual year-end cash flows:year 1: $5,000 year 4:…

A: Net Present Value (NPV) is the calculation of present value of net cash inflows from the investment…

Q: 4. Your firm is evaluating a project that should generate revenue of P4,600 in year 1, P5,200 in…

A: In this question, we need to calculate the future value of each year's revenue at the required…

Q: A company is considering a R250 000 investment with the following cash flows Year 1 : R30 000…

A: a) Working note:

Q: Cannonier, Inc., has identified an investment project with the following cash flows: Year Cash Flow…

A: In this question we need to compute the future value of stream of cash flows after 4 years. Future…

Q: UBTECH Robotics is expected to generate the following free cash flows over the next fiveyears. After…

A: Discounted cash flow (DCF) method is a popular valuation technique. It discounts the future cash…

Q: Justine Global Info Tech records the following cash flows at the end of each year a project. If the…

A: The present value is the value of the sum received at time 0 or the current period. It is the value…

Q: Consider the following date of Labanos Company: Year Investment Cash Inflow 1 4,000 1,000 2 3 2,000…

A: Payback period = Initial investment/Annual cash flow The above formula is useful if their is a…

Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

(gnore income taxes in this problem.) Your Company is considering an investment that has the following data:
Year
2
5
Investment
$20,000
Cash inflow
$12,000
$12,000
$15,000
$4,000
$4,000
In what year does the payback period for this investment occur?
Year 2.
Year 3.
Year 4.
Year 5.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Answer

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Calculate the EAR of the following investment, entered as a percentage (Example: if your answer is 0.145, enter 14.5) Year Number Cashflow 0 -11400 1 3500 2 3000 3 3100 4 2800 Your Answer:
Suppose you have the following information for a project. Year Before-Tax Income After-Tax Cash Flows Taxes Cash Flows 0 12345 -1000 500 340 244 100 100 -72 -33.6 -10.56 24 24 Calculate the present worth of after-tax cash flows. Use an interest rate of 8%. Round your answer to 2 decimal places.
(Ignore income taxes in this problem.) Your Company is considering an investment that has the following data: Year 1 2 3. 4. Investment $20,000 Cash inflow $2,000 $2,000 $5,000 $4,000 $60,000 In what year does the payback period for this investment occur? O Year 2. O Year 3. Year 4. Year 5.
Find the profitability index for Oman Air conditioner Company if the initial investment is 4000 OMR and the cash Inflows are as follows: Year 1 =1350 OMR; Year 2 =1400 OMR; Year 3=1450 OMR and Year 4=1500 OMR. Use discount rate as 5%. Select one: a. None b. 1.69 c. 1.83 d. 1.26 e. 1.48
I need the manual excel formula as well as the FV Excel Function. C. Suppose you save $2,800 a year for 43 years into an investment account that earn 8.5% return, how much will you have at the end of the periods? Formula $ ??? Excel Functon $1,066,616.08
Assume that at the beginning of the year, you purchase an investment for $2,500 that pays $67 annual income. Also assume that the investment's value has decreased to $2,350 at the end of the year. a. What is the rate of return for this investment? b. Is the rate of return a positive or a negative number? Complete this question by entering your answers in the tabs below. Req 1 Req 2 What is the rate of return for this investment? Note: Enter your answer as a percent rounded to 2 decimal places. Input the amount as a positive value. Rate of return % Req 1 Req 2 >
A company is thinking in investing in one of two potential new products for sale. The projections are as follows: year Revenue/cost £ (Product S) Revenue/cost £ (Product V) 0 (150,000) outlay (150,000) outlay 1 14000 15000 2 24000 25333 3 44000 52000 4 84000 63333 a) Calculate the payback period for both products in years and months, not as a decimal. Please present answer to nearest month.b) Calculate NPV of both products (to 1 d.p.) assuming a discount rate of 7%.c) Which product should be chosen and why?d) Calculate the IRR for Product V only using 1% and 17% to 2 d.p.e) Outline the advantages and disadvantages of the IRR and payback using appropriate academic sources.
A company has two investment possibilities, with the following cash inflows: Investment Year 1 Year 2 Year 3 A $1,000 1,400 1,800 B $1,700 1,700 1,700 If the firm can earn 6 percent in other investments, what is the present value of investments A and B? Use Appendix B and Appendix D to answer the question. Round your answers to the nearest dollar.PV(Investment A): $ __________PV(Investment B): $ __________ If each investment costs $4,000, is the present value of each investment greater than the cost of the investment? The present value of investment A is __less than___ / __greater than__ the cost. The present value of investment B is __less than___ / __greater than__ cost.
Find the internal rate of return for the following investment (yes I want the actual rate). Is it a good idea if MARR=10%? Year 2$ -160,400 75,000 -32,000 55,000 32,500 69,500 1 3 4
A real estate investment has the following expected cash flows: Year Cash Flows 1 $13,000 2 12,000 3 24,000 4 25,000 The discount rate is 4 percent. What is the investment’s present value? Round your answer to 2 decimal places; for example 2345.25.
A company is thinking in investing in one of two potential new products for sale. The projections are as follows: year Revenue/cost £ (Product S) Revenue/cost £ (Product V) 0 (150,000) outlay (150,000) outlay 1 14000 15000 2 24000 25333 3 44000 52000 4 84000 63333 a) Calculate the IRR for Product V only using 1% and 17% to 2 d.p.b) Outline the advantages and disadvantages of the IRR and payback using appropriate academic sources.
For example, if you a simple average of 5 year of either income or cash flow of:year 1 100year2 100year 3 100year 4 100year 5 100total 500average 100cap rate 0.2value 500 Now you go to the balance sheet as of the valuation date and have a cash balance of $500 and the industry working capital benchmark is $200, is it fair to add $300 to the value of the business? That is really the question. In practice, particularly matrimonial valuations, some practitioners would opine, if the owner sells the business they would realize $500 in value plus $300 in excess working capital for a total value of $800. Remember the value included the $300 ($100 each year), possibly not distributed cash flow/earnings, is that really value?