Answer each independent question, (a) through (e) below a. Project A costs $5,000 and will generate annual after-tax net cash inflows of $2,000 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 $5.000 and will generate after-tax cash inflows of $600 in year 1, $1,300 in year 2, $2.200 in year 3. $2,600 in year 4. and $2,200 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.) Project C costs $5,000 and will generate net cash inflows of $2,750 before taxes for 5 years. The firm uses straight-line depreciation with no salvage value and is subject to a 30% 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 $5,000 and will generate sales of $4.200 each year for 5 years. The cash expenditures will be $1.600 per year. The firm uses straight-line depreciation with an estimated salvage value of $600 and has a tax rate of 30%. (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.) es. What is the NPV of project A? Assume that the firm requires a minimum after-tax return of 8% on investment e2 What is the NPV of project B? Assume that the firm requires a minimum after tax return of 8% on investment e3. What is the NPV of project C? Assume that the firm requires a minimum after-tax return of 8% on investment. e4. What is the NPV of project D? Assume that the firm requires a minimum after tax return of 8% on investment a years b C Payback period Payback period Payback period Book rate of return Book rate of return NPV of Project A NPV of Project B NPV of Project C NPV of Project D years years % % 81 d2 e1 e2 64
