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Problem 5-2 Payback Consider the following projects: Co C1 C2 C3 C4 C5 A -1700 1700 0 0 0 0 B -3400 1700 1700 4700
Problem 5-2 Payback Consider the following projects:
Co | C1 | C2 | C3 | C4 | C5 | |
A | -1700 | 1700 | 0 | 0 | 0 | 0 |
B | -3400 | 1700 | 1700 | 4700 | 1700 | 1700 |
C | -4250 | 1700 | 1200 | 0 | 1700 | 1700 |
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If the opportunity cost of capital is 9%, which project(s) have a positive NPV?
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Calculate the payback period for each project.
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Which project(s) would a firm using the payback rule accept if the cutoff period is three years?
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Calculate the discounted payback period for each project.
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Which project(s) would a firm using the discounted payback rule accept if the cutoff period is three years?
Problem 5-2 Payback Consider the following projects: C4 Project B -1,700 -3,400 -4,250 Cash Flows ($) Ci C2 1,700 0 1,700 1,700 1,700 1,200 C3 0 4,700 0 0 1,700 1,700 Cs 0 1,700 1,700 a. If the opportunity cost of capital is 9%, which project(s) have a positive NPV? b. Calculate the payback period for each project. c. Which project(s) would a firm using the payback rule accept if the cutoff period is three years? d. Calculate the discounted payback period for each project. e. Which project(s) would a firm using the discounted payback rule accept if the cutoff period is three years? Required A Required B Requ Calculate the payback period for e 1.00 year(s) Project A Project B Project 2.00 year(s) 4.79 year(s) Required A Required B Required C Required D Calculate the discounted payback period for each project. decimal places. If a project never pays back, enter "0".) Project A Project B Project C 1.00 year(s) 2.11 year(s) 4.47 year(s)
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