Hint to #2: Is there an answer to Discounted Payback? Why or why not?

A B C D E F G H Problem 10.33 Comprehensive Skywards Inc., an airline caterer, is purchasing refrigerated trucks at a total cost of$3.25 million. After-tax net income from this investment is expected to be $750,000 for the next five years. Annual depreciation expense was $650,000. The company's cost of capital is 17 percent. Hint: Lking the information given in the problem, compute the cash flows for each year of the project's life. Cost: Project Life (years): Discount Rate: Year Net Income Depreciation Project Cash Flows 12 13 0 a. What is the discounted payback period? Hint: Calculate the cumulative present value cash flow for each year of the project's life and compute the project's discounted payback period. Project PVCF@ Cumulative Cumulative Year Cash Flow PVCE Periods Discounted Payback Period: b. What is the NPV on this investment? Hint: Calculate the net present value using an equation and then use the NIV function, NPVrate,valuel,value2, ..), to compute the net present value of the project. NPV (Equation): NPV (Excel Function): c. Calculate the IRR. Hint: Use the IRR function, IRR(values.guess), to compute the internal rate of return of the project. IRR Problem 1 Problem 2B C D E F H Problem 1031 Comprehensive Primus Corp is planning to convert an existing warehouse into a new plant that will increase its production capacity by 43 percent. The cost of this project 3 will be $3,125,000. It will result in additional cash flows of $1,875,000 for the next eight years. The company uses a discount rate of 12 percent. Hint: Recognize that the project cash flows are in the form of an annuity and input a simple equation for calculating the payback period. Then calculate the payback period. Calculate the net present value using an equation and then use the NPV function, NPV(rate, value I, value?, -), to compute the net present value of the project Use the IRR function, IRR( values guess), to compute the internal rate of return of the project. Discount Rate: Year Project Cash Flows 3 4 6 a. What is the payback period? Payback Period ( Annuity): Discount Rate: 12 00% Project Cash Flame Cummlathe Cash Flax Cumulative Perkads 2 4 Payback Period: h. What is the NPV for this project? NPV (Equation): NPV (Excel Function): c. What is the IRR? IRR: Problem 1 Problem 2