Question
Could you fill in the blanks please? Thank you!! Payback 4: You are considering two independent projects, Project 9-6A1 and Project 9-6A2. The initial cash
Could you fill in the blanks please? Thank you!!
Payback 4: You are considering two independent projects, Project 9-6A1 and Project 9-6A2. The initial cash outlay associated with Project 9-6A1 is $50,000 and the initial cash outlay associated with Project 9-6A2 is $70,000. The required rate of return on both projects is 12 percent. Project 9-6A1 has expected free cash flows of $12,000 for years 1-6. Project 9-6A2 has expected free cash flows of $13,000 for years 1-6. You have an expected Payback Period of 5 years.
- What is the projects payback (Undiscounted FCF) and discounted payback periods Discounted FCF)? This is the schedule of outlays and free cash flows over the life of the project. Hint: Complete the table.
- What are each projects NPV (Net Present Value)?
- What are each projects Discounted Payback Period in years?
- What are each projects IRRs (Internal Rate of Return)?
Do you accept ether, both or neither project? Explain your reasoning.
Payback Period Required Rate of Return Project 9-6A1 Project 9-6A2 Undiscounted FCF Cumulative Discounted FCF Undiscounted FCF Cumulative Discounted FCF PVIF Discounted FCF PVIF Discounted FCF Year 0 Year 0 1 1 2 2 3 3 4 4 5 5 6 6 NPV NPV Calculated IRR % Calculated IRR 1 PV Factor (1+r)" r=rate of return n = number of periods Fraction Fraction Discounted Payback Period Discounted Payback Period Do you accept the project? Enter "YES" or "NO" here Do you accept the project? Enter "YES" or "NO" here Enter your reasoning for accepting either, both or neither projectStep by Step Solution
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