Green Cars Inc. is considering a project with the following expected cash flows. Year Cash Flow 0 -$75,000 1 $18,500 2 $18,500 3 $18,500 4 $18,500 5 $12,500 6 $12,500 7 $12,500 8 $12,500 What is the payback period of this project?
Q: Gonzales is considering a project that has the following cash flow and WACC data. The project's NPV…
A: Project's NPV = Present value of cashflows - Initial Investment
Q: Mundall Company is considering a project that will require an initial investment of $600,000 and is…
A: GIVEN Year 1 $100,000 Year 2 $250,000 Year 3 $250,000 Year 4 $200,000 Year 5 $100,000…
Q: The total investment required for a project is estimated at OMR 90, 000. The cash flows expected…
A: Investment = 90000 Free cash flow (year 1) = 18000 Balance after 1 year= 90000-18000=72000 Free cash…
Q: Taggart Inc. is considering a project that has the following cash flow data. What is the project's…
A: Payback period is the time it requires for the project to recover its cost. The method does not…
Q: A project will generate the following cash flows. If the required rate of return is 15%, what is the…
A: To open the "NPV function" window - MS-Excel --> Formulas --> Financials --> NPV.
Q: Susmel Inc is considering a project that has the following cash flow data. What is the project's…
A: Payback period is the number of years in which the initial investment would be recovered by the…
Q: Rayver Cruz is considering a project that has the following cash flow and WACC data. What is the…
A:
Q: You have been asked to analyze two investment proposals, A and B. Project A's cost is RM80,000 and…
A: Internal rate of return or IRR is the rate at which NPV = 0 It is calculated via interpolation…
Q: Compute the approximate profitability index of the project if the discount rate is 10%
A: Profitability index is a methodology adopted in the capital budgeting techniques that helps in…
Q: Mansi Inc is considering a project that has the following cash flow data. What is the project's…
A: Formulas:
Q: Please use the payback method to analyze the project whose cash flows are provided below. The cost…
A: Payback period is the period in which the initial cash flow is realised.
Q: The Sisyphean Company is planning on investing in a new project. This will involve the purchase of…
A: Net Present Value (NPV) is used in capital budgeting decision, If NPV is grater than zero then it…
Q: Alpha corp is considering an investment that has a cost of $285,000. The table below shows the cash…
A: Internal rate of return at which present value of cash flow is zero. Initial investment is equal to…
Q: A project has the following cash flows below. What is the internal rate of return of this project?…
A: IRR Is the rate at which present value of future cash flows are equal to the cash outflows now. We…
Q: Company Rapid Growth is considering the following project: Year 0 1 2 3 4 5 Cash Flows -$89300…
A: Net present value (NPV) is used to determine the present value of all future cash flows. Net present…
Q: Worthington Inc. is considering a project that has the following cash flow data. What is the…
A: Payback Period = Years before full recovery + (unrecovered cost at the start of the year/ cashflow…
Q: Company Rapid Growth is considering the following project: Year 0 1 2 3 4 5 Cash Flows -$87800…
A: Profitability Index: It is the tool that measures the relationship between PV(Present Value) of cash…
Q: Consider the previous question with the following details: A company is considering a project that…
A: In the project evaluation using the discounted payback period, we should compute the present value…
Q: Kikwetu Limited is considering investing in a project with the following expected cashflows:…
A: Profitability index means the division of cash inflow with cash outflow of the project. Since…
Q: Kikwetu Limited is considering investing in a project with the following expected cashflows:…
A: Profitability Index is the ratio of present value of inflows to present value of cash flows. Present…
Q: Susmel Inc. is considering a project that has the following cash flow data. The project's regular…
A: Introduction: Payback period: Usually, payback period is expressed in years, which takes a capital…
Q: If a company has a required rate of return of 15%, should the following project be accepted based on…
A: Net present value is the difference between the present value of cash inflows and present value of…
Q: Below is the cash flow of project Alpha. (EOY: end of year) EOY Cash Flow 0 -$200,000 1 $25,000 2…
A: The net worth of the project after the deduction of the current worth of the cash outflows from the…
Q: 1) XYZ Company is considering investing in a project that requires an initial investment of $200,000…
A: Payback Period :— it is the most Popular and widely recognised traditional methods of evaluating the…
Q: ABC Company is considering a project that has the following cash flow data. Year…
A: Payback method is one of the capital budgeting technique which helps in evaluating profitability of…
Q: Insigne Corporation is considering two investment projects (projects A and project B) that are…
A: We have the following data regarding outflows and inflows for the two projects:
Q: Watts Co. is considering a project that has the following cash flow and WACC data. What is the…
A: GIVEN, WACC = 10% YEAR CASHFLOW 0 -725 1 375 2 400 3 425 4 450
Q: Blue Plc is considering investing in a project. The project requires an initial investment of…
A: Net present value is the difference between the present value of sequential cash inflow and outflow.…
Q: A company is trying to estimate the first-year cash flow (at Year 1) for a proposed project. The…
A: The cash flow of the project can be calculated as the after tax cash flow plus depreciation tax…
Q: link of an Eye Company is evaluating a 5-year project that will provide cash flows of $32,500,…
A: Net present value is the most popular method of capital budgeting. NPV is used to judge the…
Q: A firm evaluates all of its projects by applying the NPV decision rule. A project under…
A: The net present value of the project represents the present worth of the project and NPV helps…
Q: What is the net present value of a project with the following cash flows and a required return of…
A: NPV is the sum of present value of future cashflows PV = cashflow/(1+rate)^year
Q: Blossom Industries management is planning to replace some existing machinery in its plant. The cost…
A: Net Present Value(NPV) is excess of PV of cash inflows over initial outlay related to a proposal.…
Q: Findell Corporation is considering two projects, A and B, and it has gathered the following…
A: The present value index or profitability index is calculated as ratio of present value of cash…
Q: indell Corporation is considering two projects, A and B, and it has gathered the following estimates…
A: Present value index represents the efficiency of a project under capital budgeting decisions.…
Q: A company needs to decide if it will move forward with two new products that it is evaluating. The…
A: A method of capital budgeting that helps to evaluate the present worth of cash flow and a series of…
Q: Craig's Car Wash Inc. is considering a project that has the following cash flow and cost of capital…
A: r = 10% Initial Cost = 900 Annual Cash Flow = 500
Q: Consider a project with inflows of $20,000 and outflows of $13,000. If the tax rate is 33%, and if…
A: Annual inflow (A) = $20000 Annual outflow (O) = $13000 Tax rate (T) = 33% Let D = Depreciation
Q: Viva’s Junkshop is considering a project that has the following cash flow and WACC data. What is the…
A: The NPV can be calculated as present value of cash inflows less initial investment
Q: What is the payback period of a project that has \$5 540,000 in initial investment , \$150,000 in…
A: Net annual cash flows = Annual cash inflows - Annual cash outflows = 150,000 - 60,000…
Q: ABC Co. is considering a project that has the following cash flow data. What is the project's…
A: Payback Period The payback period is the method of capital budgeting that tells the total time taken…
Q: Colsen Communications is trying to estimate the first-year cashflow (at Year 1) for a proposed…
A: a. Calculate Cash flow for year 1 as below: Resultant table: Hence, Cash flow for Year 1 is $3.9…
Q: A project has the following cash flows. What is the payback period? Year Cash Flow 0 −$10,000 1…
A: Payback period is that the time that's required to recover the value of an investment in way of cash…
Q: For a project that has a net investment of $150,000 and net cash flows of $40,000 for 5 years; Is…
A: Given information: Project’s net investment is $150,000 Net cash flows of $40,000 for 5 years
Q: Bronx Steel, Inc., has a project with the following cash flows: Year Cash Flow 0 –$ 24,200 1…
A: IRR is the internal rate of return. It is that rate at which NPV (net present value) of an…
Q: The total investment required for a project is estimated at OMR100, 000. The cash flows expected…
A: The payback period is the amount of time required for cash inflows generated by a project to…
Q: Chandler Tire Co. is trying to decide which one of two projects it should accept. Both projects have…
A: As per the time value of money concept, individuals prefer to receive a sum of money at the earliest…
Q: Jogging Gear is considering a project with an initial cash requirement of $238,400. The project will…
A: Computation of the ROR on this project is shown below: Hence, the Rate of Return annually is…
Green Cars Inc. is considering a project with the following expected cash flows.
|
Year |
Cash Flow |
|
0 |
-$75,000 |
|
1 |
$18,500 |
|
2 |
$18,500 |
|
3 |
$18,500 |
|
4 |
$18,500 |
|
5 |
$12,500 |
|
6 |
$12,500 |
|
7 |
$12,500 |
|
8 |
$12,500 |
What is the payback period of this project?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- What information does the payback period provide? Suppose you are evaluating a project with the expected future cash inflows shown in the following table. Your boss has asked you to calculate the project’s net present value (NPV). You don’t know the project’s initial cost, but you do know the project’s regular, or conventional, payback period is 2.50 years. Year Cash Flow Year 1 $350,000 Year 2 $500,000 Year 3 $450,000 Year 4 $425,000 If the project’s weighted average cost of capital (WACC) is 8%, the project’s NPV (rounded to the nearest dollar) is: $312,620 $295,253 $277,885 $347,356 Which of the following statements indicate a disadvantage of using the regular payback period (not the discounted payback period) for capital budgeting decisions? Check all that apply. The payback period is calculated using net income instead of cash flows. The payback period does not take the project’s entire life into account.…Consider a project with the following cash flows in dollars ($): Year Cash Flow0 -15,0001 50002 50003 50004 5000 Assume the appropriate discount rate for this project is 12%. What is the payback period for this project? (Round your answer to the tenths.)A project has the following cash flows: Year 0: 74000 Year 1: -49000 Year 2: -41000 What is the IRR for this project? If the required return is 12%, should the firm accept the project? What is the NPV of this project? What is the NPV of the project if the required return is 0%? 24%? What is going on here? Explain your answer
- 7. The NPV and payback period What information does the payback period provide? Suppose you are evaluating a project with the expected future cash inflows shown in the following table. Your boss has asked you to calculate the project’s net present value (NPV). You don’t know the project’s initial cost, but you do know the project’s regular, or conventional, payback period is 2.50 years. Year Cash Flow Year 1 $375,000 Year 2 $475,000 Year 3 $500,000 Year 4 $400,000 If the project’s weighted average cost of capital (WACC) is 8%, the project’s NPV (rounded to the nearest dollar) is: $345,386 $328,117 $414,463 $362,655Use the following information to answer questions 11-15:A firm evaluates a project with the following cash flows. The firm has a 2 year payback period criteria and a required return of 11 percent.Year Cash flow (OMR)0 -24,0001 17,0002 12,0003 9,0004 -8,0005 11,00011. What is the net present value for the project?12. What is the payback period for the project?13. What is the discounted payback period for the project?14. What is the profitability index for the project?15. Given your analysis, should the firm accept or reject the project?16. You recently purchased a stock that is expected to earn 33 percent in a booming economy, 13 percent in a normal economy, and lose 40 percent in a recessionary economy. There is a 15 percent probability of a boom and a 60 percent chance of a normal economy. What is your expected rate of return on this stock?Use the following information to answer questions 11-15:A firm evaluates a project with the following cash flows. The firm has a 2 year payback periodcriteria and a required return of 16 percent.Year Cash flow(OMR)0 -35,0001 15,0002 17,0003 15,0004 -13,0005 11,00011. What is the net present value for the project?12. What is the payback period for the project?13. What is the discounted payback period for the project?14. What is the profitability index for the project?15. Given your analysis, should the firm accept or reject the project?
- 7. The NPV and payback period What information does the payback period provide? Suppose you are evaluating a project with the expected future cash inflows shown in the following table. Your boss has asked you to calculate the project’s net present value (NPV). You don’t know the project’s initial cost, but you do know the project’s regular, or conventional, payback period is 2.50 years. Year Cash Flow Year 1 $300,000 Year 2 $450,000 Year 3 $500,000 Year 4 $500,000 If the project’s weighted average cost of capital (WACC) is 8%, the project’s NPV (rounded to the nearest dollar) is: $470,812 $449,412 $513,613 $428,011 Which of the following statements indicate a disadvantage of using the regular payback period (not the discounted payback period) for capital budgeting decisions? Check all that apply. The payback period does not take the time value of money into account. The payback period is calculated using net…Suppose you are evaluating a project with the expected future cash inflows shown in the following table. Your boss has asked you to calculate the project’s net present value (NPV). You don’t know the project’s initial cost, but you do know the project’s regular, or conventional, payback period is 2.50 years. Year Cash Flow Year 1 $375,000 Year 2 $450,000 Year 3 $425,000 Year 4 $450,000 If the project’s weighted average cost of capital (WACC) is 10%, the project’s NPV (rounded to the nearest dollar) is: $317,074 $332,173 $241,580 $301,975 Which of the following statements indicate a disadvantage of using the regular payback period (not the discounted payback period) for capital budgeting decisions? Check all that apply. The payback period does not take the time value of money into account. The payback period is calculated using net income instead of cash flows. The payback period does not take the project’s…Talent Inc. is considering a project that has the following cash flow and WACC data.WACC: 7%Year 0 1 2 3Cash flows -$1,600 $500 $600 $700 (1) What is the project's NPV?(2) What is the project's IRR?(3) What is the project's Payback Period?(4) What is the project's Discounted Payback Period?
- Suppose you are evaluating a project with the expected future cash inflows shown in the following table. Your boss has asked you to calculate the project’s net present value (NPV). You don’t know the project’s initial cost, but you do know the project’s regular, or conventional, payback period is 2.50 years. Year Cash Flow Year 1 $375,000 Year 2 $450,000 Year 3 $475,000 Year 4 $425,000 If the project’s weighted average cost of capital (WACC) is 10%, the project’s NPV (rounded to the nearest dollar) is: $267,719 $312,338 $297,465 $282,592 Which of the following statements indicate a disadvantage of using the regular payback period (not the discounted payback period) for capital budgeting decisions? Check all that apply. The payback period does not take the time value of money into account. The payback period does not take the project’s entire life into account. The payback period is calculated using net income…The NPV and payback period What information does the payback period provide? Suppose you are evaluating a project with the expected future cash inflows shown in the following table. Your boss has asked you to calculate the project’s net present value (NPV). You don’t know the project’s initial cost, but you do know the project’s regular, or conventional, payback period is 2.50 years. Year Cash Flow Year 1 $325,000 Year 2 $450,000 Year 3 $475,000 Year 4 $425,000 Q1. If the project’s weighted average cost of capital (WACC) is 8%, the project’s NPV (rounded to the nearest dollar) is: a. $381,870 b. $363,686 c. $327,317 d. $309,133 Q2. Which of the following statements indicate a disadvantage of using the regular payback period (not the discounted payback period) for capital budgeting decisions? Check all that apply. a. The payback period is calculated using net income instead of cash flows. b. The payback…(Paybackperiod, NPV, PI, and IRR calculations) You are considering a project with an initial cash outlay of $80,000 and expected free cash flows of $26,000 at the end of each year for 6 years. The required rate of return for this project is 7 percent. a. What is the project's payback period? b. What is the project's NPV? c. What is the project's PI? d. What is the project's IRR?