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Branka is considering two projects both of which have an initial cost of $20,000 and total cash inflows of $25,000. The cash inflows of
Branka is considering two projects both of which have an initial cost of $20,000 and total cash inflows of $25,000. The cash inflows of project A are $3,000, $5,000, $8,000, and $9,000 over the next four years, respectively. The cash inflows for project B are $9,000, $8,000, $5,000, and $3,000 over the next four years, respectively. Branka requires a 10 percent rate of return and has a required discounted payback period of 3 years. What is the Discounted Payback period for her? Would Branka accept the project? Show calculations in detail. 5.If the economy flourishes, Cheng's Plumbing stock is expected to return 19%. If the economy falls into a recession, the stock's return is projected at 5%. The probability of a boom is 80% while the probability of a recession is 20%. What is the variance of the returns on this stock?
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