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 $400,000 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: $306,479 O $278,617 O $334,340 $236,824 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 instead of cash flows.

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7. The NPV and payback period What information does the payback period provide? Suppose Praxis Corporation's CFO is evaluating a project with the following cash inflows. She does not know the project's initial cost; however, she does know that the project's regular payback period is 2.5 years. Year Cash Flow Year 1 $350,000 Year 2 $475,000 Year 3 $475,000 Year 4 $400,000 If the project's weighted average cost of capital (WACC) is 10%, what is its NPV? $278,324 $333,989 $292,240 $236,575 Which of the following statements indicate a disadvantage of using the discounted payback period for capital budgeting decisions? Check all that apply. ☐ The discounted payback period does not take the project's entire life into account. The discounted payback period does not take the time value of money into account. The discounted payback period is calculated using net income instead of cash flows. ☐

A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows:    Year Cash Flow 0 –$ 29,000   1   13,000   2   16,000   3   12,000        What is the NPV for the project if the required return is 12 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)      At a required return of 12 percent, should the firm accept this project?   multiple choice 1 Yes No   What is the NPV for the project if the required return is 24 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)      At a required return of 24 percent, should the firm accept this project?   multiple choice 2 Yes No

Taggart Inc. is considering a project that has the following cash flow data. What is the project's payback in years? Year 0 1 2 3 Cash flows -$1,175 $460 $460 $460 Please explain and provide calculations.

A project that provides annual cash flows of $12,600 for 12 years costs $65,000 today. At what rate would you be indifferent between accepting the project and rejecting it? Answer with Excel functions

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…

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Let's assume that you are working on an independent capital budgeting project which is expected to have the following cash flows: Year    Cash Flows 0          -$850,000 1          $300,000 2          $400,000 3          $500,000 What is the project’s net present value (NPV) at an 18% required rate of return? (Round to the nearest whole number.) Will you accept or reject this project?

Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 9 percent, and that the maximum allowable payback and discounted payback statistics for the project are 2.0 and 3.0 years, respectively.                  Time: 0 1 2 3 4 5 6 Cash flow: −$7,100 $1,000 $2,200 $1,400 $1,400 $1,200 $1,000   Use the IRR decision rule to evaluate this project. (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places.)   Should it be accepted or rejected?multiple choice accepted rejected