A firm with a 10 percent cost of capital is considering a
project for this year’s capital budget. The project’s expected
after-tax cash flows are as follows:
Year: |
0 |
1 |
2 |
3 |
4 |
Cash flow: |
-$12,000 |
$5,500 |
$4,900 |
$5,500 |
$4,600 |
Calculate the project’s discounted payback
period.
a. |
2.29 years |
|
b. |
2.50 years |
|
c. |
2.00 years |
|
d. |
2.71 years |
|
e. |
3.00 years |
A firm with a 10 percent cost of capital is considering a project for this year’s...
A firm with a 10 percent cost of capital is considering a project for this year’s capital budget. The project’s expected after-tax cash flows are as follows: Year: 0 1 2 3 4 Cash flow: -$10,000 $3,200 $3,400 $4,700 $4,700 Calculate the project’s net present value (NPV). a. $6,000.00 b. $2,460.35 c. $2,236.68 d. $4,545.45 e. $928.22
A firm with a 10.5 percent cost of capital is considering a project for this year’s capital budget. The project’s expected after-tax cash flows are as follows: Year: 0 1 2 3 4 Cash flow: -$8,000 $3,600 $3,000 $3,900 $3,800 Calculate the project’s internal rate of return (IRR). a. 19.19% b. 27.42% c. 78.75% d. 15.63% e. 39.43%
A firm with a 9 percent cost of capital is considering a project for this year’s capital budget. The project’s expected after-tax cash flows are as follows: Year: 0 1 2 3 4 Cash flow: -$15,000 $5,700 $4,700 $6,900 $6,800 Calculate the project’s modified internal rate of return (MIRR). a. 60.67% b. 20.96% c. 28.87% d. 16.14% e. 12.59%
A firm is considering the following projects. Its opportunity cost of capital is 10%. Cash Flows, $ Project Time: 0 1 2 3 4 A -7,300 +1,575 +1,575 +4,150 0 B -3,300 0 +3,300 +3,150 +4,150 C -7,300 +1,575 +1,575 +4,150 +7,300 a. What is the payback period on each project? Project A - ____ years Project B - ____ years Project C - ____ years What is the discounted payback period on each project? (Round...
10. Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistics for the project are three and a half four and a half years. respectively. Use the payback decision to evaluate this project: should it be accepted or rejected? What is the payback period? Time -$5,000 1,300 S1.400 1.600...
Capital Budgeting: Homework 1. Waste Management has a WACC of 12 percent and it is considering a project with a cost of $52,125. The project’s expected net cash inflows are $12,000 per year for 8 years. What is the project’s payback period? What is the project’s net present value (NPV)? What is the profitability index? What is the project’s internal rate of return (IRR)? What is the project’s modified internal rate of return (MIRR)?
Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistics for the project are 2.5 and 3.5 years, respectively. Time:0123456Cash flow:−$4,600$1,120$2,320$1,520$1,520$1,320$1,120Use the payback decision rule to evaluate this project. (Round your answer to 2 decimal places.)
Nichols Inc. is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's IRR can be less than the cost of capital or negative, in both cases it will be rejected. Year 0 1 2 3 4 5 Cash flows −$1,250 $325 $325 $325 $325 $325 a. 10.92% b. 9.43% c. 11.47% d. 10.40% e. 9.91% Westwood Painting Co. is considering a project that has the following cash flow and cost...
Compute the discounted payback statistic for Project if the appropriate cost of capital is 8 percent and the maximum allowable discounted payback period is three years. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Project t Timet Cash flow: -51,600 $720 $660 Discounted payback period Should the project be accepted or rejected accepted rejected
Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 13 percent, and that the maximum allowable payback and discounted payback statistic for the project are 2 and 3 years, respectively. Use the payback decision rule to evaluate this project; should it be accepted or rejected? Suppose your firm is considering investing in a project with the cash flows shown below, that...