Exhibit 2.3AExamp'e Comparing Two Projects Using the Payback MethodProject AProject BFormulasInvestmentAnnual saving5750,0005215,000$250.000580,000Project A Payback 07/D8)Project B Payback (7/P8)Payback Period"Rate of Return"*Project A: Rate of Return (06/D7)Project D. Rate of Return (F8/P7)Accept/RejectExclanetionProject AAccept/Reject Accept is Payback<5 Years and Rate of Return 15%Project B* Note: Parbnck does not use she time valce of money** Note: Rate of returnis reciprocalof Fayback

The time taken by an investment to repay the initial capital investment is called the payback period…

ng Iwo Projects Using the Payback Method Project A Project B Formulas Investment 5750,000 5215,000 $250,000 $80,000 Annual savings Project A: Payback (07/08) Project B: Payback (F7/PS) Payback Period" Rate of Return"* Project A: Rate of Return (D8/D7) Project B. Rate of Return = (F8/F7) Accept/Reject Explanation Project A Accept/Reject: Accept is Payback <5 Years and Rate of Return > 15% Project B:

ng Iwo Projects Using the Payback Method Project A Project B Formulas Investment 5750,000 5215,000 $250,000 $80,000 Annual savings Project A: Payback (07/08) Project B: Payback (F7/PS) Payback Period" Rate of Return"* Project A: Rate of Return (D8/D7) Project B. Rate of Return = (F8/F7) Accept/Reject Explanation Project A Accept/Reject: Accept is Payback <5 Years and Rate of Return > 15% Project B:

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter10: The Basics Of Capital Budgeting: Evaluating Cash Flows

Section: Chapter Questions

Problem 23SP: Start with the partial model in the file Ch10 P23 Build a Model.xlsx on the textbooks Web site....

See similar textbooks

Similar questions

Consider the following two projects: Project Year 0 Year 1 Year 2 Year 3 Year 4 Discount Cash Flow Cash Flow Cash Flow Cash Flow Cash Flow Rate A - 100 40 50 60 N/A 0.13 B - 73 30 30 30 30 0.13 The net present value (NPV) of project B is closest to: O A. 17.9 В. 20.3 C. 40.6 O D. 16.2 O O
Consider the following two projects: Projec Year 0 Year 1 Year 2 Year 3 Year 4 Cash Cash Cash Cash Cash Discount Flow Flow Flow Flow Flow Rate A -100 40 50 60 N/A 0.11 -73 30 30 30 30 0.11 The net present value (NPV) of project As closest to Select one: a. 51.2 b. 25.6 O c. 20.5 Od. 22.5
Consider the following two projects: Project Year 0 Year 1 Year 2 Cash Flow Cash Flow Cash Flow A B - 100 -73 40 30 30 The profitability index for project B is closest to: OA. 25.99 B. 0.1 O C. 17.33 O D. 0.17 50 Year 3 Cash Flow 60 30 Year 4 Cash Flow N/A 30 Discount Rate 0.15 0.15
Compute the pay back, discounted pay back, NPV and IRR of the following projects; Assume a discount rate of 10% C0 C1 C2 C3 Project A -2000 500 500 5000 Project B -2000 500 1800 0 Project C -2000 1800 500 0
Problem 7: NPV versus IRR. Consider the following two mutually exclusive projects: Year Cash flow Cash flow (X) (Y) O 1 2 3 -9500 5800 4000 4000 PART 7A: The NPV for X is $ Answer: 2083.77 -9500 3500 5000 6000 if the required rate of return is 10%.
Consider the following two projects: Year 0 Project Cash Flow - 100 - 73 Discount Rate A 50 60 .15 B 30 30 .15 The maximum number of incremental IRRs that could exist for project B over project A is: Year 1 Cash Flow O A. 2 OB. 3 O C. 1 OD. O Year 2 Cash Flow 40 30 Year 3 Cash Flow Year 4 Cash Flow N/A 30 ...
Consider the following two mutually exclusive projects: Second part of the Question Year Cash Flow(X) Cash Flow(Y) 0 –$ 19,900 –$ 19,900 1 8,825 10,050 2 9,050 7,775 3 8,775 8,675 d) At which range of discount rates would you choose Project X over Project Y? e) At which range of discount rates would you choose Project Y over Project X?
Consider the following two projects: Project Year 0 Year 1 Cash Flow Cash Flow A B - 100 -73 40 30 OA. 2.7 years OB. 2 years OC. 2.3 years D. 2.5 years Year 2 Cash Flow 50 30 The payback period for project A is closest to Year 3 Cash Flow 40 30 *** Year 4 Cash Flow N/A 30 Discount Rate 0.1 0.1
Spreadsheet Link What is the IRR of the following project?Cash FlowYear0 -32,0001. 9,0002. 10,0003. 15,0004. 7,800 1). 10.8% 2). 11.2% 3). 11.7%4). 12.0% 5). 12.3%
Consider the following two projects: Project Year 0 Cash Flow - 100 - 73 A 50 B 30 The net present value (NPV) of project A is closest to OA. 22.9 B. 18.3 Year 1 Year 2 Year 3 Cash Flow Cash Flow Cash Flow C. 45.7 D. 20.1 40 30 60 30 Year 4 Cash Flow N/A 30 Discount Rate 0.12 0.12
Consider two projects, A and B. Year 0 1 2 Cashflow (in £) for A -4,000 1,882 4,000 Find the value of X if the positive internal rate of return (IRR) for both projects are the same. Give your answer to 2 decimal places. Cashflow (in £) for B -2,000 -4,000 X
Question The following economical indictors are referring to types of project (A and B). Answer the following points according to these given indictors in the tables. project A:r=8% project B: r=8% year cash flow (CF) year cash flow (CF) 0 -598 0 -384 1 110 1 105 2 170 2 105 3 210 3 95 4 320 4 118 A) If you are aware that( r%) percentages are various for different reasons to be (10% and 20%). So determine level of NPV during your analysis procedures for whole the mentioned cases of (% r) for each project? B) Which one of the mentioned project are more economically by using concept of IRR and take the range of (% r) between (9% to %25) for supporting your answers? C) Drawing out all the levels of various of the project for each cases of (r %) which given initially in point (A) above. D) Give clear justification about any of the above project more feasible?