Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 9%. 0 1 2 3 4 Project A -1,050 600 370 290 340 Project B -1,050 200 305 440 790 What is Project A's payback? Do not round intermediate calculations. Round your answer to four decimal places. years What is Project A's discounted payback? Do not round intermediate calculations. Round your answer to four decimal places. years What is Project B's payback? Do not round intermediate calculations. Round your answer to four decimal places. years What is Project B's discounted payback? Do not round intermediate calculations. Round your answer to four decimal places. years
Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 9%.
| 0 | 1 | 2 | 3 | 4 | ||||||
| Project A | -1,050 | 600 | 370 | 290 | 340 | |||||
| Project B | -1,050 | 200 | 305 | 440 | 790 |
What is Project A's payback? Do not round intermediate calculations. Round your answer to four decimal places.
years
What is Project A's discounted payback? Do not round intermediate calculations. Round your answer to four decimal places.
years
What is Project B's payback? Do not round intermediate calculations. Round your answer to four decimal places.
years
What is Project B's discounted payback? Do not round intermediate calculations. Round your answer to four decimal places.
years
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