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a. Project A costs $6,000 and will generate annual after-tax net cash inflows of $2,150 for 5 years. What is the payback period for
a. Project A costs $6,000 and will generate annual after-tax net cash inflows of $2,150 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 $6,000 and will generate after-tax cash Inflows of $600 in year 1, $1,400 In year 2, $2,500 in year 3, $3,000 In year 4, and $2,500 In year 5. What is the payback period (in years) for this Investment assuming that the cash Inflows occur evenly throughout the year? (Round your answer to 2 decimal places.) c. Project C costs $6,000 and will generate net cash Inflows of $3,000 before taxes for 5 years. The firm uses straight-line depreciation with no salvage value and is subject to a 20% tax rate. What is the payback period under the assumption that all cash inflows occur evenly throughout the year? (Round your answer to 2 decimal places.) d. Project D costs $6,000 and will generate sales of $5,200 each year for 5 years. The cash expenditures will be $2,100 per year. The firm uses straight-line depreciation with an estimated salvage value of $650 and has a tax rate of 20%. (1) What is the accounting (book) rate of return based on the original Investment? (Round your answer to 2 decimal places.) (2) What is the book rate of return based on the average book value? (Round your answer to 2 decimal places.) Use the built-in NPV function In Excel to calculate the amounts for projects a through d. (Round your answers to the nearest whole dollar amount.) e1. What is the NPV of project A? Assume that the firm requires a minimum after-tax return of 10% on Investment. e2. What is the NPV of project B? Assume that the firm requires a minimum after-tax return of 10% on Investment. e3. What is the NPV of project C? Assume that the firm requires a minimum after-tax return of 10% on Investment. e4. What is the NPV of project D? Assume that the firm requires a minimum after-tax return of 10% on Investment. a Payback period 2.79 years b. Payback period 3.50 years C. Payback period 4.17 years d1. Book rate of retum % d2 Book rate of return % e1. NPV of Project A e2. NPV of Project B e3. NPV of Project C e4. NPV of Project D
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Capital Budgeting Analysis Projects AD a Payback Period Project A Initial Investment 6000 Annual AfterTax Cash Inflow 2150 Year Cash Inflow Cumulative ...Get Instant Access to Expert-Tailored Solutions
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