Question
Consider the following projects: Cash Flows ($) Project C 0 C 1 C 2 C 3 C 4 C 5 A 2,000 2,000 0 0
Consider the following projects:
| Cash Flows ($) | ||||||
| Project | C0 | C1 | C2 | C3 | C4 | C5 |
| A | 2,000 | 2,000 | 0 | 0 | 0 | 0 |
| B | 4,000 | 2,000 | 2,000 | 5,000 | 2,000 | 2,000 |
| C | 5,000 | 2,000 | 1,300 | 0 | 2,000 | 2,000 |
a. If the opportunity cost of capital is 12%, which project(s) have a positive NPV?
Positive NPV project(s)
| Project A | |
| Project B | |
| Project C | |
| Projects A and B | |
| Projects A and C | |
| Projects B and C | |
| Projects A, B, and C | |
| No project |
b. Calculate the payback period for each project: (Round your answers to 2 decimal places. If a project never pays back, enter "0".)
| Project A | year(s) |
| Project B | year(s) |
| Project C | year(s) |
c. Which project(s) would a firm using the payback rule accept if the cutoff period were three years?
Project(s) accepted (Click to select)Project AProject BProject CProjects A and BProjects A and CProjects B and CProjects A, B, and CNo project
d. Calculate the discounted payback for each project. (Do not round intermediate calculations. Round your answers to 2 decimal places. If a project never pays back, enter "0".)
| Project A | year(s) |
| Project B | year(s) |
| Project C | year(s) |
e. Which project(s) would a firm using the discounted payback rule accept if the cutoff period were three years?
Project(s) accepted (Click to select)Project AProject BProject CProjects A and BProjects A and CProjects B and CProjects A, B, and CNo project
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Your Financial Future How To Take Control Of Your Financial Future
Authors: Deloris Lutke
1st Edition
979-8388730831
