Question
Makmur Inc. has a new project with expected cash flow as below. Year Cash Flow ($) 0 -20,000 1 4,000 2 6,500 3 7,000 4
Makmur Inc. has a new project with expected cash flow as below.
| Year | Cash Flow ($) |
|---|---|
| 0 | -20,000 |
| 1 | 4,000 |
| 2 | 6,500 |
| 3 | 7,000 |
| 4 | 8,000 |
The company wants the project to payback in 4 years. If the required return on this project is 10 percent, help Makmur Inc. to calculate the following decision rules! Should the company accept the project? SUMMARY OF DECISION RULES
| Decision Rules | Result | Decision |
|---|---|---|
| NPV | blank | blank |
| Payback Period (in years) | blank | blank |
| Discounted Payback Period (in years) | blank | blank |
| Profitability Index | blank | blank |
| IRR | 9.44% | blank |
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Capital Budgeting
Authors: Pamela P. Peterson
1st Edition
0471218332, 9780471218333
