A project that costs $16,000 today will generate cash flows of $3,300 per year for seven...

Question

Question

A project that costs $16,000 today will generate cash flows of $3,300 per year for seven years. What is the project's payback period?

1. 3.88 years

2. 4.85 years

3. .21 years

4. 5.00 years

5. 4.04 years

Answer 1

Answer #1

payback period=initial investment/annual cash flows

=(16000/3300)

which is equal to

=4.85 years(Approx).

Add a comment

Answer 2

Similar Homework Help Questions

A project that costs $23,000 today will generate cash flows of $8,900 per year for seven...

A project that costs $23,000 today will generate cash flows of $8,900 per year for seven years. What is the project's payback period?
A project that costs $19,500 today will generate cash flows of $6,100 per year for seven...

A project that costs $19,500 today will generate cash flows of $6,100 per year for seven years. What is the project's payback period? Multiple Choice 266 years 3.00 years 31 years 3.20 years 256 years
A project costs $91,000 today and is expected to generate cash flows of $11,000 per year...

A project costs $91,000 today and is expected to generate cash flows of $11,000 per year for the next 20 years. The firm has a cost of capital (discount rate) of 8 percent. Should this project be accepted, and why.

An investment project costs $15,800 and has annual cash flows of $3,300 for six years. ...

An investment project costs $15,800 and has annual cash flows of $3,300 for six years. a. What is the discounted payback period if the discount rate is zero percent? b. What is the discounted payback period if the discount rate is 4 percent? c. What is the discounted payback period if the discount rate is 20 percent?
Project S costs $16,000 and its expected cash flows would be $4,500 per year for 5...

Project S costs $16,000 and its expected cash flows would be $4,500 per year for 5 years. Mutually exclusive Project L costs $50,000 and its expected cash flows would be $12,200 per year for 5 years. If both projects have a WACC of 12%, which project would you recommend?
a. Project A costs $5,500 and will generate annual after-tax net cash inflows of $2,600 for...

a. Project A costs $5,500 and will generate annual after-tax net cash inflows of $2,600 for 5 years. What is the payback period for this investment under the assumption that the cash inflows occur evenly throughout the year? (Round your answer to 2 decimal places.) b. Project B costs $5,500 and will generate after-tax cash inflows of $660 in year 1, $1,400 in year 2, $2,400 in year 3, $2,700 in year 4, and $2,400 in year 5. What is...

A project requires an investment of $1,200 today and it is expected to generate free cash...

A project requires an investment of $1,200 today and it is expected to generate free cash flows of $400 at the end of year 1, $500 at the end of year 2 and, $700 at the end of year 3. The company's weighted average cost of capital is 10.4% per year. What is the project's equivalent annual annuity? 1) $19.7 2) $28.3 3) $37.6 4) $16.4 5) $33.9
Question 7 What is the payback period of a $16,000 investment with the following cash flows?...

Question 7 What is the payback period of a $16,000 investment with the following cash flows? Year 1 2 3 4 5 Cash Flow $3,000 $4,000 $5,000 $6,000 $7,000 O 5.00 years 3.67 years 2.33 years 2.43 years 3.57 years
14.A project requires an investment of $2,700 today. It can generate sales of $3,300 per year...

14.A project requires an investment of $2,700 today. It can generate sales of $3,300 per year forever. Costs are $1,800 for the first year and will increase by 20% per year. Assume all sales and costs occur at the end of the year. (For example, costs are $1,800 at t 1 and 20% higher at t-2). Ignore depreciation and taxes and calculate the NPV of the project assuming a 12% discount rate. Hint: The project is stopped when costs exceed...

2. Project P costs $35,800 and is expected to produce cash flows of $8,500 per year...

2. Project P costs $35,800 and is expected to produce cash flows of $8,500 per year for six years. Project Q costs $90,000 and is expected to produce cash flows of $21,000 per year for six years. a. Calculate the NPV, IRR, MIRR, and traditional payback period for each project, assuming a required rate of return of 8 percent. b. If the projects are independent, which project(s) should be selected? If they are mutually exclusive, which project should be selected?