Cash Flow |
A |
B |
C |
D |
Cost |
$ 10,000 |
$ 25,000 |
$ 45,000 |
$ 100,000 |
Cash flow year 1 |
$ 4,000 |
$ 2,000 |
$ 10,000 |
$ 40,000 |
Cash flow year 2 |
$ 4,000 |
$ 8,000 |
$ 15,000 |
$ 30,000 |
Cash flow year 3 |
$ 4,000 |
$ 14,000 |
$ 20,000 |
$ 20,000 |
Cash flow year 4 |
$ 4,000 |
$ 20,000 |
$ 20,000 |
$ 10,000 |
Cash flow year 5 |
$ 4,000 |
$ 26,000 |
$ 15,000 |
$ - |
Cash flow year 6 |
$ 4,000 |
$ 32,000 |
$ 10,000 |
$ - |
PLEASE SHOW ME ALL THE STEPS, I'M TRYING TO LEARN THE BASICS OF IT. THANK YOU!
A | Discount rate= | 0.05 | ||||
Year | Cash flow stream | Cumulative cash flow | Discounting factor | Discounted CF | Cumulative cash flow | Cumulative discounted CF |
0 | -10000 | -10000 | 1 | -10000 | -10000 | -10000 |
1 | 4000 | -6000 | 1.05 | 3809.524 | -6000 | -6190.48 |
2 | 4000 | -2000 | 1.1025 | 3628.118 | -2000 | -2562.36 |
3 | 4000 | 2000 | 1.157625 | 3455.35 | 2000 | 892.9921 |
4 | 4000 | 6000 | 1.215506 | 3290.81 | 6000 | 4183.802 |
5 | 4000 | 10000 | 1.276282 | 3134.105 | 10000 | 7317.907 |
6 | 4000 | 14000 | 1.340096 | 2984.862 | 14000 | 10302.77 |
Discounted payback period is the time by which discounted cashflow cover the intial investment outlay | ||||||
this is happening between year 2 and 3 | ||||||
therefore by interpolation payback period = 2 + (0-(-2562.36))/(892.99-(-2562.36)) | ||||||
2.74 Years | ||||||
Where | ||||||
Discounting factor =(1 + discount rate)^(corresponding year) | ||||||
Discounted Cashflow=Cash flow stream/discounting factor | ||||||
B | Discount rate= | 0.05 | ||||
Year | Cash flow stream | Cumulative cash flow | Discounting factor | Discounted CF | Cumulative cash flow | Cumulative discounted CF |
0 | -25000 | -25000 | 1 | -25000 | -25000 | -25000 |
1 | 2000 | -23000 | 1.05 | 1904.762 | -23000 | -23095.2 |
2 | 8000 | -15000 | 1.1025 | 7256.236 | -15000 | -15839 |
3 | 14000 | -1000 | 1.157625 | 12093.73 | -1000 | -3745.28 |
4 | 20000 | 19000 | 1.215506 | 16454.05 | 19000 | 12708.77 |
5 | 26000 | 45000 | 1.276282 | 20371.68 | 45000 | 33080.45 |
6 | 32000 | 77000 | 1.340096 | 23878.89 | 77000 | 56959.35 |
Discounted payback period is the time by which discounted cashflow cover the intial investment outlay | ||||||
this is happening between year 3 and 4 | ||||||
therefore by interpolation payback period = 3 + (0-(-3745.28))/(12708.77-(-3745.28)) | ||||||
3.23 Years | ||||||
Where | ||||||
Discounting factor =(1 + discount rate)^(corresponding year) | ||||||
Discounted Cashflow=Cash flow stream/discounting factor | ||||||
C | Discount rate= | 0.05 | ||||
Year | Cash flow stream | Cumulative cash flow | Discounting factor | Discounted CF | Cumulative cash flow | Cumulative discounted CF |
0 | -45000 | -45000 | 1 | -45000 | -45000 | -45000 |
1 | 10000 | -35000 | 1.05 | 9523.81 | -35000 | -35476.2 |
2 | 15000 | -20000 | 1.1025 | 13605.44 | -20000 | -21870.7 |
3 | 20000 | 0 | 1.157625 | 17276.75 | 0 | -4594 |
4 | 20000 | 20000 | 1.215506 | 16454.05 | 20000 | 11860.05 |
5 | 15000 | 35000 | 1.276282 | 11752.89 | 35000 | 23612.95 |
6 | 10000 | 45000 | 1.340096 | 7462.154 | 45000 | 31075.1 |
Discounted payback period is the time by which discounted cashflow cover the intial investment outlay | ||||||
this is happening between year 3 and 4 | ||||||
therefore by interpolation payback period = 3 + (0-(-4594))/(11860.05-(-4594)) | ||||||
3.28 Years | ||||||
Where | ||||||
Discounting factor =(1 + discount rate)^(corresponding year) | ||||||
Discounted Cashflow=Cash flow stream/discounting factor |
A | Discount rate= | 0.05 | ||||
Year | Cash flow stream | Cumulative cash flow | Discounting factor | Discounted CF | Cumulative cash flow | Cumulative discounted CF |
0 | -100000 | -100000 | 1 | -100000 | -100000 | -100000 |
1 | 40000 | -60000 | 1.05 | 38095.24 | -60000 | -61904.8 |
2 | 30000 | -30000 | 1.1025 | 27210.88 | -30000 | -34693.9 |
3 | 20000 | -10000 | 1.157625 | 17276.75 | -10000 | -17417.1 |
4 | 10000 | 0 | 1.215506 | 8227.025 | 0 | -9190.1 |
Discounted payback period is the time by which discounted cashflow cover the intial investment outlay | ||||||
This is not happening during project life hence it cannot be calculated | ||||||
Where | ||||||
Discounting factor =(1 + discount rate)^(corresponding year) | ||||||
Discounted Cashflow=Cash flow stream/discounting factor |
Given the following four projects and their cash flows, calculate the discounted payback period with a 5% discount rate...
Discounted payback period) Assuming an appropriate discount rate of 11 percent, what is the discounted payback period on a project with an initial outlay of $100,000 and the following cash flows? Year 1 $30,000 Year 2 $35,000 Year 3 $25,000 Year 4 $25,000 Year 5 $30,000 Year 6 $20,000 The project's discounted payback period is years. (Round to two decimal places.)
6 Instructions Your manager wants you to evaluate two mutually exclusive projects. The cash flows of the project is given in the flowing tables. 8 Project 1 $ uomi Cash flow (30,000) 8,000 10,000 11,000 17,000 12,000 + Onm Project 2 Cash flow $ (15,000) 2,000 5,000 7,000 2,000 25,000 20 The required rate of return is 15%. The first step is too evaluate the project using NPV, IRR, payback rule 21 You will do so in each tab named...
(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...
Discounted payback period. Becker, Inc. uses the discounted payback period for projects costing less than $25,000 and has a cutoff period of four years for these small-value projects. Two projects, R and S, in the following table, PE, are under consideration. Their anticipated cash flows are listed in the following table. If Becker uses a discount rate of 4% on these projects, are they accepted or rejected? If it uses a discount rate of 8%? A discount rate of 18%?...
Discounted payback period. Becker, Inc. uses the discounted payback period for projects costing less than $25,000 and has a cutoff period of four years for these small-value projects. Two projects, R and S, in the following table, B are under consideration. Their anticipated cash flows are listed in the following table. If Becker uses a discount rate of 6% on these projects, are they accepted or rejected? If it uses a discount rate of 12%? A discount rate of 18%?...
QUESTION 1 Star Industries is considering three alternative projects for the company's investment. The cash flows for three independent projects are as follows: Year 1 Project A ($50,000) $10,000 $15,000 $20,000 $25,000 $30,000 Project B ($100,000) $25,000 $25,000 $25,000 $25,000 $25,000 Project C ($450,000) $200,000 $200,000 $200,000 a) If the discount rate for all three projects is 9.5 percent, calculate the profitability index (PI) of these three projects. Which project will be accepted if the projects are mutually exclusive? b)...
project's appropriate discount rate is 12 percent, what is the proces discounted payback period (Discounted Payback periodies Restaurants is considering project with the following expected cash flows The projects discounted payback period is yours (Round to be decimal places) 1 Data Table PROJECT CASH FLOW - $20 million 80 milion 65 milion 80 millon 95 m. (Click on the concated on the h ome of the data above in order to conten t Print Done
What is the DISCOUNTED PAYBACK PERIOD for the following project? Discount Rate 6.00% Investment $15,000.00 Cash Flow Year 1 $3,000.00 Cash Flow Year 2 $4,000.00 Cash Flow Year 3 $5,000.00 Cash Flow Year 4 $6,000.00
Question 5 a. Given the following cash flows, for the two independent projects A and B, calculate i. Payback Period ii. Accounting rate of return iii. Net Present Value iv. Profitability index And recommend acceptance or rejection of projects considering individual techniques of capital budgeting. A rate of 10 % has been selected for the NPV analysis. Project A Project B Initial outlay $50,000 $100,000 Cash inflows Year 1 $10,000 $ 25,000 Year 2 15,000 ...
( Discounted payback period) Gio's Restaurants is considering a project with the following expected cash flows. If the project's appropriate discount rate is 11 percent, what is the projects's discounted payback period? expected cash flows: Year Project Cash Flow 0 - $180 million 1 90 million 2 65 million 3 100 million 4 100 million The Project's discounted payback period is ____