Suppose you are evaluating a project with the 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.
The project's annual cash flows are:
Year | Cash Flow |
---|---|
Year 1 | $375,000 |
Year 2 | 450,000 |
Year 3 | 300,000 |
Year 4 | 400,000 |
If the project’s desired rate of return is 9.00%, the project’s NPV—rounded to the nearest whole dollar—is .
Which of the following statements indicates a disadvantage of using the regular, or conventional, payback period for capital budgeting decisions? Check all that apply.
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12. The NPV and payback period Suppose you are evaluating a project with the 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. The project's annual cash flows are: Year Cash Flow Year 1 $375,000 Year 2 400,000 Year 3 300,000 Year 4 475,000 If the project’s desired...
Suppose you are evaluating a project with the 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.The project's annual cash flows are:YearCash FlowYear 1$375,000Year 2450,000Year 3300,000Year 4400,000If the project’s desired rate of return is 9.00%, the project’s NPV—rounded to the nearest whole
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