Payback period is the period in which initial invetsment is recovered.
Year | Opeing Bal | CF | Clsoing Bal |
1 | $ 1,09,00,000.00 | $ 41,00,000.00 | $ 68,00,000.00 |
2 | $ 68,00,000.00 | $ 21,00,000.00 | $ 47,00,000.00 |
3 | $ 47,00,000.00 | $ 21,00,000.00 | $ 26,00,000.00 |
4 | $ 26,00,000.00 | $ 21,00,000.00 | $ 5,00,000.00 |
5 | $ 5,00,000.00 | $ 21,00,000.00 | $ -16,00,000.00 |
= 4 Years + [ 500000 / 2100000 ] YearsPBP = Year in which least +ve
CB + [ CB in that Year / CF of Next year ]
= 4 + 0.24
= 4.24 Years
Part B:
If PBP expected is 2Years, Reject the Project as Actual PBP is 4.06 Years.
Part C:
NPV = PV of Cash Inflows - PV of Cash Outflows
Year | CF | PVF @10.4% | Disc CF |
0 | $ -1,09,00,000.00 | 1.0000 | $ -1,09,00,000.00 |
1 | $ 41,00,000.00 | 0.9058 | $ 37,13,768.12 |
2 | $ 21,00,000.00 | 0.8205 | $ 17,22,983.62 |
3 | $ 21,00,000.00 | 0.7432 | $ 15,60,673.57 |
4 | $ 21,00,000.00 | 0.6732 | $ 14,13,653.59 |
5 | $ 21,00,000.00 | 0.6098 | $ 12,80,483.33 |
NPV | $ -12,08,437.78 |
Movie has negative NPV @10.4% Disc Rate
.
You are considering making a movie. The movie is expected to cost $10.9 million up front...
You are considering making a movie. The movie is expected to cost $10.5 million up front and take a year to produce. After that, it is expected to make $4.7 million in the year it is released and $1.8 million for the following four years. What is the payback period of this investment? If you require a payback period of two years, will you make the movie? Does the movie have positive NPV if the cost of capital is 10.9%?...
You are considering making a movie. The movie is expected to cost $ 10.1 million up front and take a year to produce. After that, it is expected to make $ 4.1 million in the year it is released and $ 2.1 million for the following four years. What is the payback period of this investment? If you require a payback period of two years, will you make the movie? Does the movie have positive NPV if the cost of...
You are considering making a movie. The movie is expected to cost $10.7 million up front and take a year to produce. After that, it is expected to make $4.9 million in the year it is released and $1.7 million for the following four years. What is the payback period of this investment? If you require a payback period of two years, will you make the movie? Does the movie have positive NPV if the cost of capital is 10.7%?...
You are considering making a movie. The movie is expected to cost $10.1 million up front and take a year to produce. After that, it is expected to make $4.5 million in the year it is released and S2.2 million for the following four years, What is the payback period of this investment? If you require a payback period of two years, w What is the payback period of this investment? The payback period isyears. (Round to one decimal place.)...
You are considering making a movie. The movie is expected to cost $10.8 million up front and take a year to produce. After? that, it is expected to make $4.1 million in the year it is released and $1.7 million for the following four years.a) What is the payback period of this? investment?b) If you require a payback period of two? years, will you make the? movie? Does the movie have positive NPV if the cost of capital is 10.6%??npv...
You are considering making a movie. The movie is expected to cost $10.2 million up front and take a year to produce. After that, it is expected to make $4.3 million in the year it is released and $1.8 million for the following four years. What is the payback period of this investment? If you require a payback period of two years, will make the movie? Does the movie have positive NPV if the cost of capital is 10.5%? you...
You are considering making a movie. The movie is expected to cost $10.0 million up front and take a year to produce. After that, it is expected to make $5.0 milioni the year it is released and $20 million for the following four years. What is the payback period of this investment? If you require a payback period of two years, will you make the movie? Does the movie have positive NPV if the cost of capital is 100%? nu...
You are considering making a movie. The movie is expected to cost $10.9 million upfront and take a year to make. After that, it is expected to make $4.1 million in the first year it is released (end of year 2) and $1.8 million for the following four years (end of years 3 through 6). What is the payback period of this investment? If you require a payback period of two years, will you make the movie? What is the...
You are considering making a movie. The movie is expected to cost $10.1 million up front and take a year to produce. After that, it is expected to make $4.9 million in the year it is released and $1.7 million for the following four years. What is the payback period of this investment? If you require a payback period of two years, will you make the movie? Does the movie have positive NPV if the cost of capital is 10.1%?...
You are considering making a movie. The movie is expected to cost $10.7 million up front and take a year to produce. After that, it is expected to make $4.9 million in the year it is released and $1.7 million for the following four years. What is the payback period of this investment? If you require a payback period of two years will you make the movie? Does the movie have positive NPV if the cost of capital is 10.7%...