Kara, Incorporated, imposes a payback cutoff of three years for itsinternational investment projects. Assume the company has thefollowing two projects available.Year Cash Flow (A)-$ 59,000Cash Flow (B)0123424,00031,40026,00012,000-$ 104,00026,00031,00028,000236,000a. What is the payback period for each project?Note: Do not round intermediate calculations and round youranswers to 2 decimal places, e.g., 32.16.b. Which, if either, of the projects should the company accept?a. Project AyearsProject Byearsb. Project acceptanceAccept Project A and reject Project B

The payback period serves as a straightforward gauge of investment recovery time, indicating the…

Answered: Kara, Incorporated, imposes a payback…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 19EA: Redbird Company is considering a project with an initial investment of $265,000 in new equipment...

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Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $7,400 per year for 5 years. Calculate the two projects’ NPVs, IRRs, MIRRs, and PIs, assuming a cost of capital of 12%. Which project would be selected, assuming they are mutually exclusive, using each ranking method? Which should actually be selected?
Redbird Company is considering a project with an initial investment of $265,000 in new equipment that will yield annual net cash flows of $45,800 each year over its seven-year life. The companys minimum required rate of return is 8%. What is the internal rate of return? Should Redbird accept the project based on IRR?
Kara, Incorporated, imposes a payback cutoff of three years for its international investment projects. Assume the company has the following two projects available. Year Cash Flow (A) 01234 -$ 52,000 20,500 27,200 22,500 8,500 Cash Flow (B) -$ 97,000 22,500 27,500 31,500 243,000 a. What is the payback period for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. b. Which, if either, of the projects should the company accept? a. Project A Project B b. Project acceptance years years
Stenson, Inc., imposes a payback cutoff of three years for its international investment projects. Assume the company has the following two projects available. Cash Flow(A) -$ 54,000 21,500 28,400 23,500 9,500 Cash Flow(B) -$ 99,000 23,500 28,500 30,500 241.000 Year What is the payback period for each project? Project A years Project B years Which, if either, project(s) should the company accept? -234
Kara, Incorporated, imposes a payback cutoff of three years for its international investment projects. Assume the company has the following two projects available. Year Cash Flow (A) 0 -$56,000 1 2 3 4 22,500 29,600 24,500 10,500 Cash Flow (B) -$ 101,000 a. Project A Project B b. Project acceptance 24,500 29,500 29,500 239,000 a. What is the payback period for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. b. Which, if either, of the projects should the company accept? years years
Kara, Incorporated, imposes a payback cutoff of three years for its international investment projects. Assume the company has the following two projects available. Year Cash Flow (A) Cash Flow (B) 0 −$ 56,000 −$ 101,000 1 22,500 24,500 2 29,600 29,500 3 24,500 29,500 4 10,500 239,000 What is the payback period for each project? Which, if either, of the projects should the company accept?
Stenson, Inc., imposes a payback cutoff of three years for its international investment projects. Assume the company has the following two projects available. Year Cash Flow A Cash Flow B O -$60,000 -$ 105,000 24,500 32,000 26,500 12,500 26,500 31,500 27,500 235,000 What is the payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Project A Project B years years -23 4
Stenson, Inc., imposes a payback cutoff of three years for its international investment projects. Assume the company has the following two projects available. Year Cash Flow A Cash Flow B -$58,000 -$103,000 23,500 30,800 25,500 11,500 25,500 30,500 28,500 237,000 1 2 What is the payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Project A years Project B years Which, if either, project(s) should the company accept?
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