Question
Here are the expected cash flows for three projects: cash flows (dollars) Project Year : 0 1 2 3 4 A --5,500 +1,125 +1,125 +3,250
Here are the expected cash flows for three projects:
cash flows (dollars)
Project Year : 0 1 2 3 4
A --5,500 +1,125 +1,125 +3,250 0
B --1,500 0 +1,500 +2,250 +3,250
C --5,500 +1,125 +1,125 +3,250 +5,250
a. what is the payback period on each of the project?
Project Payback period
A ___________years
B ___________years
C ____________years
b. if you use a cutoff period of 2 years, which projects would you accept?
Project A
Project B
Project C
Project A and B
Project B and C
Project A and C
Projects A, B, and C
None
c. If you use a cutoff period of 3 years, which projects would you accept?
Project A
Project B
Project C
Project A and B
Project B and C
Project A and C
Projects A, B, and C
None
d-1 If the opportunity cost of capital is 11%, calculate the NPV for projects A, B, and C. (Negative amounts should be indicated by a minus sign. Do not round intermediate calcualtions. Round your answers to 2 decimal places.)
Project NPV
A $___________
B $___________
C $___________
d-2 Which projects have a positive NPVs?
Project A
Project B
Project C
Project A and B
Project B and C
Project A and C
Projects A, B, and C
None
e. "Payback gives too much weight to cash flows that occur after the cutoff date" (True or False)
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