2. Payback (S5.2) Consider the following projects: Cash Flows ($) Project C0 C1 C2 C3 C4 C5...
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2. Payback (S5.2) Consider the following projects:
Cash Flows ($)
Project C0 C1 C2 C3 C4 C5 A –1,000 +1,000 0 0 0 0 B –2,000 +1,000 +1,000 +4,000 +1,000 +1,000 C –3,000 +1,000 +1,000 0 +1,000 +1,000
a. If the opportunity cost of capital is 10%, which projects have a positive NPV?
b. Calculate the payback period for each project.
c. Which project(s) would a firm using the payback rule accept if the cutoff period is three years?
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Related Book For
Principles Of Corporate Finance
ISBN: 9781264080946
14th Edition
Authors: Richard Brealey, Stewart Myers, Franklin Allen, Alex Edmans
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