Question
ABC Inc. has a new project with expected cash flow as below. Year Cash Flow ($) 0 -20,000 1 4,000 2 6,500 3 7,000 4
ABC Inc. has a new project with expected cash flow as below.
| Year | Cash Flow ($) |
|---|---|
| 0 | -20,000 |
| 1 | 4,000 |
| 2 | 6,500 |
| 3 | 7,000 |
| 4 | 8,000 |
The company wants the project to payback in 4 years. If the required return on this project is 10 percent, help ABC Inc. to calculate the following decision rules! Should the company accept the project?
DECISION RULES:
| Decision Rules | Result | Decision (Accept/Reject) |
|---|---|---|
| NPV | ||
| Payback Period (in years) | ||
| Discounted Payback Period (in years) | ||
| Profitability Index | ||
| IRR | 9.44% |
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Advanced Bond Portfolio Management
Authors: Frank J. Fabozzi, Lionel Martellini, Philippe Priaulet
1st Edition
0471678902, 9780471678908
