A.)
What is the payback period on Popeye's purchase of a new
pleasure boat for his tourist business? The expected cash flows
appear below. (note: payback is in years; round to 2
decimals)
Year 0 cash flow = -9,400,000
Year 1 cash flow = 4,300,000
Year 2 cash flow = 2,400,000
Year 3 cash flow = 3,200,000
Year 4 cash flow = 2,700,000
Year 5 cash flow = 4,400,000
Year 6 cash flow = 3,800,000
B.)You are analyzing the Photon project, which has the expected
cash flows below. The Photon project has a 4 year life (assume
"best life") and is competing against another project for funding
(the Warp project). That is, the two projects are mutually
exclusive. The Warp project has an 8 year life (assume "best life";
cash flows not provided).
You notice that the projects have lives of different lengths, so
you ask whether the Photon project can be repeated at the end of 4
years. The answer is that it can be. To adjust for the differing
lives, you decide to use the NPV replacement chain method. For your
initial analysis, you are to assume that Photon can be duplicated
exactly.
Using the replacement chain method and a discount rate of 13.2%,
compute Photon's NPV, in a way that would be appropriate to compare
to the NPV of the Warp project. Round to nearest penny.
Year 0 cash flow = -172,000
Year 1 cash flow = 71,000
Year 2 cash flow = 71,000
Year 3 cash flow = 71,000
Year 4 cash flow = 71,000
A.) What is the payback period on Popeye's purchase of a new pleasure boat for his...
What is the payback period on Popeye's purchase of a new pleasure boat for his tourist business? The expected cash flows appear below. (note: payback is in years; round to 2 decimals) Year 0 cash flow = -9,400,000 Year 1 cash flow = 4,300,000 Year 2 cash flow = 2,400,000 Year 3 cash flow = 3,200,000 Year 4 cash flow = 2,700,000 Year 5 cash flow = 4,400,000 Year 6 cash flow = 3,800,000
What is the payback period on Popeye's purchase of a new pleasure boat for his tourist business? The expected cash flows appear below. (note: payback is in years; round to 2 decimals) Year 0 cash flow = -9,300,000 Year 1 cash flow = 4,300,000 Year 2 cash flow = 3,200,000 Year 3 cash flow = 4,300,000 Year 4 cash flow = 4,200,000 Year 5 cash flow = 4,400,000 Year 6 cash flow = 2,500,000
You are analyzing the Photon project, which has the expected cash flows below. The Photon project has a 4 year life (assume "best life") and is competing against another project for funding (the Warp project). That is, the two projects are mutually exclusive. The Warp project has an 8 year life (assume "best life"; cash flows not provided). You notice that the projects have lives of different lengths, so you ask whether the Photon project can be repeated at the...
You are analyzing the Photon project, which has the expected cash flows below. The Photon project has a 4 year life (assume "best life") and is competing against another project for funding (the Warp project). That is, the two projects are mutually exclusive. The Warp project has an 8 year life (assume "best life"; cash flows not provided). You notice that the projects have lives of different lengths, so you ask whether the Photon project can be repeated at the...
What is the payback period on Popeye's purchase of a new pleasure boat for his tourist business? The expected cash flows appear below. (note: payback is in years; round to 2 decimals) Year 0 cash flow = -8,700,000 Year 1 cash flow = 4,400,000 Year 2 cash flow = 3,600,000 Year 3 cash flow = 4,000,000 Year 4 cash flow = 3,100,000 Year 5 cash flow = 4,100,000 Year 6 cash flow = 4,400,000
What is the payback period on Popeye's purchase of a new pleasure boat for his tourist business? The expected cash flows appear below. (note: payback is in years; round to 2 decimals) Year 0 cash flow = -8,200,000 Year 1 cash flow = 2,600,000 Year 2 cash flow = 3,300,000 Year 3 cash flow = 3,700,000 Year 4 cash flow = 2,600,000 Year 5 cash flow = 4,200,000 Year 6 cash flow = 2,800,000
(Discounted payback period) Gio's Restaurants is considering a project with the following expected cash flows: Year Project Cash Flow (millions) $(210) AWNO If the project's appropriate discount rate is 11 percent, what is the project's discounted payback period? The project's discounted payback period is years. (Round to two decimal places.) (Mutually exclusive projects and NPV) You have been assigned the task of evaluating two mutually exclusive projects with the following projected cash flows: Project A Project B Year Cash Flow...
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...
7. The NPV and payback period What information does the payback period provide? 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 $325,000 Year 1 Year 2 $400,000 Year 3 $425,000 Year 4 $500,000 If...
7. The NPV and payback period What information does the payback period provide? 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 Year 1 Year 2 Year 3 Year 4 Cash Flow $350,000 $450,000 $475,000 $450,000 If...