Foundations Of Finance
10th Edition
ISBN: 9780134897264
Author: KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher: Pearson,
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Chapter 10, Problem 18SP
(Discounted payback period) Gio’s Restaurants is considering a project with the following expected
If the project’s appropriate discount is 12 percent, what is the project’s discounted payback?
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Please answer all questions a,b and c with explanations. Should each discount be accepted or rejected. Thx
(Discounted payback period) Gio's Restaurants is considering a project with the following
expected cash flows:
Year
0
1
2
60
3
100
4
105
(Click on the icon in order to copy its contents into a spreadsheet.)
Project Cash Flow (millions)
$(180)
100
If the project's appropriate discount rate is 8 percent, what is the project's discounted
Davback period?
The project's discounted payback period is
years. (Round to two decimal places.)
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Chapter 10 Solutions
Foundations Of Finance
Ch. 10 - Why is capital budgeting such an important...Ch. 10 - What are the disadvantages of using the payback...Ch. 10 - Prob. 4RQCh. 10 - What are mutually exclusive projects? Why might...Ch. 10 - Prob. 6RQCh. 10 - When might two mutually exclusive projects having...Ch. 10 - Prob. 1SPCh. 10 - Prob. 2SPCh. 10 - Prob. 3SPCh. 10 - Prob. 4SP
Ch. 10 - (NPV, PI, and IRR calculations) Fijisawa Inc. is...Ch. 10 - (Payback period, NPV, PI, and IRR calculations)...Ch. 10 - (NPV, PI, and IRR calculations) You are...Ch. 10 - (Payback period calculations) You are considering...Ch. 10 - (NPV with varying required rates of return)...Ch. 10 - Prob. 10SPCh. 10 - (NPV with varying required rates of return) Big...Ch. 10 - (NPV with different required rates of return)...Ch. 10 - (IRR with uneven cash flows) The Tiffin Barker...Ch. 10 - (NPV calculation) Calculate the NPV given the...Ch. 10 - (NPV calculation) Calculate the NPV given the...Ch. 10 - (MIRR calculation) Calculate the MIRR given the...Ch. 10 - (PI calculation) Calculate the PI given the...Ch. 10 - (Discounted payback period) Gios Restaurants is...Ch. 10 - (Discounted payback period) You are considering a...Ch. 10 - (Discounted payback period) Assuming an...Ch. 10 - (IRR) Jella Cosmetics is considering a project...Ch. 10 - (IRR) Your investment advisor has offered you an...Ch. 10 - (IRR, payback, and calculating a missing cash...Ch. 10 - (Discounted payback period) Sheinhardt Wig Company...Ch. 10 - (IRR of uneven cash-flow stream) Microwave Oven...Ch. 10 - (MIRR) Dunder Mifflin Paper Company is considering...Ch. 10 - (MIRR calculation) Arties Wrestling Stuff is...Ch. 10 - (Capital rationing) The Cowboy Hat Company of...Ch. 10 - Prob. 29SPCh. 10 - (Size-disparity problem) The D. Dorner Farms...Ch. 10 - (Replacement chains) Destination Hotels currently...Ch. 10 - Prob. 32SPCh. 10 - Prob. 33SPCh. 10 - Why is the capital-budgeting process so important?Ch. 10 - Prob. 2MCCh. 10 - What is the payback period on each project? If...Ch. 10 - What are the criticisms of the payback period?Ch. 10 - Prob. 5MCCh. 10 - Prob. 6MCCh. 10 - Prob. 7MCCh. 10 - Prob. 8MCCh. 10 - Prob. 9MCCh. 10 - Determine the IRR for each project. Should either...Ch. 10 - How does a change in the required rate of return...Ch. 10 - Caledonia is considering two investments with...
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- (Discounted payback period) Gio's Restaurants is considering a project with the following expected cash flows: Year Project Cash Flow (millions) $(210) 100 60 3 100 4 90 (Click on the icon e in order to copy its contents into a spreadsheet.) If the project's appropriate discount rate is 13 percent, what is the project's discounted payback period? The project's discounted payback period is years. (Round to two decimal places.)arrow_forwardBig Steve's, makers of swizzle sticks, is considering the purchase of a new plastic stamping machine. This investment requires an initial outlay of $110,000 and will generate net cash inflows of $17,000 per year for 8 years. a.What is the project's NPV using a discount rate of 8%? Should the project be accepted? Why or why not? b.What is the project's NPV using a discount rate of 17%? Should the project be accepted? Why or why not?arrow_forward(Discounted payback period) Gio's Restaurants is considering a project with the following expected cash flows: If the project's appropriate discount rate is 12 percent, what is the project's discounted payback period? What is the project's discounted payback period?. years (Round to two decimal places.) B F text pages Financial calculator Data table YEAR 0 PROJECT CASH FLOW 12 3 4 $150 million 90 million 70 million 90 million 100 million (Click on the icon located on the top-right corner of the data table above in order to copy its contents into a spreadsheet.) Print Done MacBook Air - X Clear all 30 e Check answer F9 F10 F11 FIZarrow_forward
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- 1. Comparing all methods. Given the following after-tax cash flow on a new toy for Tyler's Toys, find the project's payback period, NPV, and IRR. The appropriate discount rate for the project is 14%. If the cutoff period is 6 years for major projects, determine whether management will accept or reject the project under the three different decision models. (Click on the following icon in order to copy its contents into a spreadsheet.) Initial cash outflow: $11,700,000 Years one through four cash inflow: $2,925,000 each year Year five cash outflow: $1,170,000 Years six through eight cash inflow: $503,000 each year What is the payback period for the new toy at Tyler's Toys? years (Round to two decimal places.) Under the payback period, this project would be (1) What is the NPV for the new toy at Tyler's Toys? $ (Round to the nearest cent.) Under the NPV rule, this project would be (2) What is the IRR for the new toy at Tyler's Toys? % (Round to two decimal places.) Under the IRR rule,…arrow_forward(Discounted payback period) Gio's Restaurants is considering a project with the following expected cash flows: Year Project Cash Flow (millions) 0 $(150) 1 90 2 70 3 90 4 100 If the project's appropriate discount rate is 12 percent, what is the project's discounted payback period? The project's discounted payback period is ( ? ) years. (Round to two decimal places.)arrow_forwarda. What is the net present value (at the discount rate of 10%) of this project?b. Perot’s engineers have determined that spending $10 million more on development will allow them to add even more advanced features. Having a more advanced chip will allow them to price the chip $50 higher in both years ($870 for year 1 and $700 for year 2). What is the NPV of the project if this option is implemented?c. If sales are only 200,000 the first year and 100,000 the second year, what would the NPV of the project be? Assume the development costs and sales price are as originally estimated. Development cost - $1,250,000Estimated development time - 9 monthsPilot testing - $200,000Ramp-up cost - $400,000Marketing and support cost - $150,000/yrSales & Production volume - $60,000/yrUnit production cost - $100Unit price - $205Interest rate - 8%arrow_forward
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