EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN: 9781337514835
Author: MOYER
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 5, Problem 27P
Summary Introduction

To determine: Whether the investment be undertaken or not.

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An investment project has annual cash inflows of $6,400, $7,500, $8,300 for the next four years, respectively, and $9,600, and a discount rate of 20 percent.   What is the discounted payback period for these cash flows if the initial cost is $9,500?
An investment promises to pay $7,000 at the end of each year for the next six years and $3,000 at the end of each year for years 7 through 10. Use Table II and Table IV or a financial calculator to answer the questions. Round your answers to the nearest cent. If you require a 15 percent rate of return on an investment of this sort, what is the maximum amount you would pay for this investment?$   Assuming that the payments are received at the beginning of each year, what is the maximum amount you would pay for this investment, given a 15 percent required rate of return?$
An investment project has annual cash inflows of $4,000, $4,900, $6,100, and $5,300, for the next four years, respectively. The discount rate is 13 percent. What is the discounted payback period for these cash flows if the initial cost is $6,700? What is the discounted payback period for these cash flows if the initial cost is $8,800? What is the discounted payback period for these cash flows if the initial cost is $11,800?
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