Solution-Calculate each projects payback period

Calculate each projects payback period

Reference no: EM131436647

Capital Budgeting Assignment

The CFO at Rabbit Corporation has asked you to analyze two proposed capital investments, Projects A and B. Each project has a cost of $10,000, and the cost of capital is 12% for each. The projects' expected net cash flows are as follows:

	Expected Net Cash Flows
Year	Project A	Project B
0	(10,000)	(10,000)
1	6,500	3,500
2	3,000	3,500
3	3,000	3,500
4	1,000	3,500

1. Calculate each project's payback period.
2. Calculate each project's net present value (NPV).
3. Calculate each project's internal rate of return (IRR).
4. Calculate each project's profitability index (PI).
5. Which project or projects should be accepted if they are independent?

Reference no: EM131436647

Questions Cloud

What were the reasons given for success and for failure : What were the reasons given for success? For failure? Which of these reasons relate to poor planning? What does this tell you about the keys to success in innovation?

Distinction between violent and nonviolent crime : Discuss the distinction between violent and nonviolent crime. Choose two of the following (corporate behavior, organized crime, political corruption) and discuss how they embody the definition and impact of nonviolent crime.

Evidence of effect due to interaction of gender and altitude : Construct the summary ANOVA table. Is there any evidence of an effect due to interaction of gender and altitude? Use a = 0.05.

Actions that the leadership of the selected country : Select one (1) developing country, and discuss the fundamental actions that the leadership of the selected country is - or is not - taking to improve the living standards of its people.

Calculate each projects payback period : Calculate each project's payback period. Calculate each project's net present value (NPV). Calculate each project's internal rate of return (IRR). Calculate each project's profitability index (PI).

Construct the anova summary table : Construct the ANOVA summary table. Is there any evidence of an effect due to interaction of location and hospital room type? Use a = 0.05.

Corporations having accumulated earnings and profits : Per the text and IRC, losses and deductions of an S corporation pass through to the shareholders of the corporation and are limited to the shareholders’ basis in the S corporation. From the e-Activity, differentiate between the treatment of S corpora..

Why are some people better at working together with others : At the heart of team effectiveness lies communication, and research into organisational team effectiveness repeatedly identifies communication styles and communication skills as the key indicators for successful collaboration. Why are some people ..

Individual experience of disability and illness : In part, an individual's experience of disability and illness reflects their social identity. What do studies tell us about how women's and men's experiences of disability differ?

User Account

All Pages

Calculate each projects payback period

Reference no: EM131436647

Reference no: EM131436647

Questions Cloud

Reviews

Write a Review

Finance Basics Questions & Answers

Financial reporting and analysis

A report on financial accounting

Describe the types of financial ratios

Differences between sole proprietorship and corporation

Prepare a cash budget statement

What are the implied interest rates

State pricing theory and no-arbitrage pricing theory

Small business administration

Effect of financial leverage

Evaluate the basis for the payment to the lender

Importance of opps, ipps, mpfs and dmepos

Time value of money

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT