Describe project payback?
Homework Answers
Project payback refers to time taken to recover the cost of the project. Shorter payback period is more attractive as compared to long payback period.But payback period has certain disadvantages as listed below:
| Disadvantage of Payback |
| 1) It does not take into account time value of money which is very necessary to evaluate an investment. |
| 2) It fails to take into account cash flows which occur after payback period. A project with lower PBP is selected even though it may produce less cash flows in future. |
a. What is the payback period for Project A? b.What is the payback period for Project...
a. What is the payback period for Project A?
b.What is the payback period for Project B?
c. What is the discounted payback period for Project A?
d. What is the discounted payback period for Project B?
e. What is the NPV for Project A?
f. What is the NPV for Project B?
g. What is the IRR for Project A?
h. What is the IRR for Project B?
i. What is the profitability index for Project A?
j. What...
a) What is the payback period of project A b) What is the payback period of...
a) What is the payback period of project A
b) What is the payback period of project B
c) What is the NPV of project A (Required rate of return is
9%)
d)c) What is the NPV of project B (Required rate of return is
9%)
Project A Project B -150000 85000 75000 22000 50000 54000 23000 32000 90000 12000
Capital Budgeting: PAYBACK Given: Project A &
Capital Budgeting: PAYBACK Given: Project A Project B Initial Investment $200,000 $300,000 Cash Flows: 1 $50,000 $100,000 2 $50,000 $100,000 3 $50,000 $100,000 4 $50,000 $50,000 5 $37394 $45,778 a. What is ‘Payback’ for each project? b. Choose ‘Payback’ ‘winner’. c. Cite advantage/disadvantage associated with ‘Payback’.
A project has a discounted payback period that is equal to the required payback period. Given...
A project has a discounted payback period that is equal to the required payback period. Given this, the project:
( Payback period Calculations) You are considering three independent projects, project A, project B, and project...
( Payback period Calculations) You are considering three independent projects, project A, project B, and project C. Given the following cash flow information, calculate the payback period for each. if you require a 3-year payback before an investment can be accepted, which project(s) would be accepted? Project A Project B Project C Initial Outlay -$1,100 -$9,000 -$6,000 Inflow year 1 600 4,000 2,000 inflow year 2 300 3,000 2,000 inflow year 3 200 3,000 3,000 inflow year 4 100 3,000...
Payback Compute the payback statistic for Project A and recommend whether the firm should accept or...
Payback Compute the payback statistic for Project A and recommend whether the firm should accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 8 percent and the maximum allowable payback is four years. Project A Time 0 1 2 3 4 5 Cash Flow -$1,000 $350 $480 $520 $300 $100
(Payback period Calculations) You are considering three independent projects:project A, project B, and project C. Given...
(Payback period Calculations) You are considering three independent projects:project A, project B, and project C. Given the following cash flow information, calculate the payback period for each. if you require a 3-year payback before an investment can be accepted, which project(s) would be accepted? Project A Project B Project C Initial Outlay -$1,000 -$9,000 -$6,500 Inflow year 1 700 5,000 2,000 Inflow year 2 300 2,000 2,000 Inflow year 3 200 2,000 3,000 Inflow year 4 100 2,000 3,000 Inflow...
Given the following cash flows for a capital project, calculate its payback period and discounted payback...
Given the following cash flows for a capital project, calculate its payback period and discounted payback period. The required rate of return is 8 percent. Year 4 Cash Flows $-44300 $11950 2 $13350 3 $19000 $8000 $3000 The discounted payback period is 0.16 year longer than the payback period. 0.80 year longer than the payback period. 1.40 years longer than the payback period. 1.85 years longer than the payback period.
Compute the payback statistic for Project A if the appropriate cost of capital is 8 percent...
Compute the payback statistic for Project A if the appropriate cost of capital is 8 percent and the maximum allowable payback period is four years. (Round your answer to 2 decimal places.) Project A Time: Cash flow: -$2,800 $1,070 $1,020 $889 $660 $460 Payback years Should the project be accepted or rejected? accepted rejected
Payback period calculations) You are considering the independent projects project A project before an investment can...
Payback period calculations) You are considering the independent projects project A project before an investment can be accepted, which project(s) would be nccepted? and project. Given the cash flow information in the popup Window, calculate the payback period for each. If you require a year payback i Data Table D $105 Initial Outlay Inflow year 1 Inflow year 2 Inflow year 3 Inflow year 4 Inflow year 5 PROJECT A - $1,000 700 200 300 200 500 PROJECT B -$10,500...
a. What is the payback period for Project A?
b.What is the payback period for Project B?
c. What is the discounted payback period for Project A?
d. What is the discounted payback period for Project B?
e. What is the NPV for Project A?
f. What is the NPV for Project B?
g. What is the IRR for Project A?
h. What is the IRR for Project B?
i. What is the profitability index for Project A?
j. What...
a) What is the payback period of project A
b) What is the payback period of project B
c) What is the NPV of project A (Required rate of return is
9%)
d)c) What is the NPV of project B (Required rate of return is
9%)
Project A Project B -150000 85000 75000 22000 50000 54000 23000 32000 90000 12000
A project has a discounted payback period that is equal to the required payback period. Given this, the project:
Given the following cash flows for a capital project, calculate its payback period and discounted payback period. The required rate of return is 8 percent. Year 4 Cash Flows $-44300 $11950 2 $13350 3 $19000 $8000 $3000 The discounted payback period is 0.16 year longer than the payback period. 0.80 year longer than the payback period. 1.40 years longer than the payback period. 1.85 years longer than the payback period.
Compute the payback statistic for Project A if the appropriate cost of capital is 8 percent and the maximum allowable payback period is four years. (Round your answer to 2 decimal places.) Project A Time: Cash flow: -$2,800 $1,070 $1,020 $889 $660 $460 Payback years Should the project be accepted or rejected? accepted rejected
Payback period calculations) You are considering the independent projects project A project before an investment can be accepted, which project(s) would be nccepted? and project. Given the cash flow information in the popup Window, calculate the payback period for each. If you require a year payback i Data Table D $105 Initial Outlay Inflow year 1 Inflow year 2 Inflow year 3 Inflow year 4 Inflow year 5 PROJECT A - $1,000 700 200 300 200 500 PROJECT B -$10,500...
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