Question
Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this
Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 9 percent, and that the maximum allowable payback and discounted payback statistics for the project are 2.0 and 3.0 years, respectively.
Time: | 0 | 1 | 2 | 3 | 4 | 5 | 6 |
Cash flow: | $7,600 | $1,190 | $2,390 | $1,590 | $1,590 | $1,390 | $1,190 |
Use the PI decision rule to evaluate this project.
Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3.5 and 4.5 years, respectively.
Time: | 0 | 1 | 2 | 3 | 4 | 5 | 6 |
Cash flow: | $5,000 | $1,230 | $2,430 | $1,630 | $1,630 | $1,430 | $1,230 |
Use the NPV decision rule to evaluate this project.
Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3.5 and 4.5 years, respectively.
Time: | 0 | 1 | 2 | 3 | 4 | 5 | 6 |
Cash flow: | $5,600 | $1,800 | $3,000 | $2,200 | $2,200 | $2,000 | $1,800 |
Use the MIRR decision rule to evaluate this project.
Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistics for the project are 2.0 and 3.0 years, respectively.
Time: | 0 | 1 | 2 | 3 | 4 | 5 | 6 |
Cash flow: | $8,600 | $1,080 | $2,280 | $1,480 | $1,480 | $1,280 | $1,080 |
Use the IRR decision rule to evaluate this project
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