(Payback and discounted payback period calculations) The Bar-None Manufacturing Co. manufactures fence panels used in cattle feed lots throughout the Midwest. Bar-None's management is considering three investment projects for next year but doesn't want to make any investment that requires more than three years to recover the firm's initial investment. The cash flows for the three projects (Project A, Project B, and Project C) are as follows: 5 a. Given Bar-None's three-year payback period, which of the projects will qualify for acceptance? b. Rank the three projects using their payback period. Which project looks the best using this criterion? Do you agree with this ranking? Why or why not? c. If Bar-None uses a discount rate of 10.7 percent to analyze projects, what is the discounted payback period for each of the three projects? If the firm still maintains its three-year payback policy for the discounted payback, which projects should the firm undertake? a. Given the cash flow information in the table, the payback period of Project Ais 2 years. (Round to two decimal places.) If the firm requires a 3-year payback before an investment can be accepted, the firm should accept Project A because its payback period is less than or equal to the maximum acceptable payback period. (Select from the drop-down menus.) The payback period of Project B is 2.72 years. (Round to two decimal places.) If the firm requires a 3-year payback before an investment can be accepted, the firm should accept Project B because its payback period is less than or equal to the maximum acceptable payback period. (Select from the drop-down menus.) The payback period of Project C is 2.71 years. (Round to two decimal places.) If the firm requires a 3-year payback before an investment can be accepted, the firm should accept Project C because its payback period is less than or equal to the maximum acceptable payback period. (Select from the drop-down menus.) b. Rank the three projects using their payback period. The project with the longest payback period is Project B Therefore the project which looks best using the The project with the shortest payback period is Project A The project with the second shortest payback period is Project C payback criterion is V. (Select from the drop-down menus.) Project C Project A Click to select your in click Check Answer. ? Project B 7 parts remaining Clear All Final Check % P11-22 (similar to) A Question Help (Payback and discounted payback period calculations) The Bar-None Manufacturing Co. manufactures fence panels used in cattle feed lots throughout the Midwest. Bar-None's management is considering three investment projects for next year but doesn't want to make any investment that requires more than three years to recover the firm's initial investment. The cash flows for the three projects (Project A, Project B, and Project C) are as follows: a. Given Bar-None's three-year payback period, which of the projects will qualify for acceptance? b. Rank the three projects using their payback period. Which project looks the best using this criterion? Do you agree with this ranking? Why or why not? c. If Bar-None uses a discount rate of 10.7 percent to analyze projects, what is the discounted payback period for each of the three projects? If the firm still maintains its three-year payback policy for the discounted payback, which projects should the firm undertake? a. Given the cash flow information in the table, the payback period of Proje Data Table If the firm requires a 3-year payback before an investment can be accepted. aximum acceptable payback period. (Select from the drop-down menus.) Year The payback period of Project B is 2.72 years. (Round to two decimal plaq 0 If the firm requires a 3-year payback before an investment can be accepted. 1 paximum acceptable payback period. (Select from the drop-down menus.) Project A $(950) 550 400 180 60 490 2 3 4 5 Project B $(9,800) 5,500 2,500 2,500 2,500 2,500 Project C $(5,500) 1,500 1,500 3,500 3,500 3,500 The payback period of Project C is 2.71 years. (Round to two decimal pla If the firm requires a 3-year payback before an investment can be accepted. haximum acceptable payback period. (Select from the drop-down menus.) b. Rank the three projects using their payback period. Print Done fiod is Project B Therefore the project which looks best using the The project with the shortest payback period is Project A The project with payback criterion is V. (Select from the drop-down menus.)