Calculate project payback period

Assignment Help Finance Basics
Reference no: EM132576340

Year Project A Project B 0 R -10 000 R -10 000 1 6 500 3 500
2 3 000 3 500

3 3 000 3 500

4 1 000 3 500

NB: Each project has a cost of R10 000, and the cost of capital for each is 12 percent

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

2. Which project or projects should be accepted if they are independent?

3. Which project should be accepted if they are mutually exclusive?

4. How might a change in the cost of capital produce a conflict between the NPV and IRR rankings of these two projects? Would this conflict exist if r were 5 percent? (Hint: Plot the NPV profiles.)

5. Why does the conflict exist?

Reference no: EM132576340

Questions Cloud

Make the necessary journal entries until December : The machine and maintenance service can be sold separately. Make the necessary journal entries until 31 December 2019
Essay about differences between schools and university : Essay - Need a contrast essay about differences between schools and university, also I want it to be done by point by point method
Personal mentoring and coaching strategies and techniques : Evaluate your personal mentoring and coaching strategies and techniques.
What will be the respective shares of S : Upon liquidation, cash of P300,000 becomes available for distribution to the partners. In the final distribution, what will be the respective shares of S
Calculate project payback period : Calculate each project's payback period, net present value (NPV), internal rate of return (IRR), and profitability index (PI).
Explain the role of inflation in cash flows : Explain the role of inflation in cash flows. Focus specifically on the impact of inflation on the cash flows of a project investment
What is relational model : What is a relational Model? What is a Primary Key?
Discuss all of the deviance theories : From all of the deviance theories discussed in the text and in the videos, which one do you think explains most effectively the existence of deviance in society
Prepare Kingbird journal entries : Kingbird Inc., began work on a $7,500,000, non-cancellable contract in 2020 to construct an office building. Prepare Kingbird journal entries

Reviews

Write a Review

Finance Basics Questions & Answers

  Compute direct materials price and quantity variances

1 Compute direct materials price and quantity variances 2 Compute direct labour rate and efficiency variances 3 Prepare a brief explanation of the possible causes of each variance

  Mr miser loans money at an annual rate of 19 percent

mr. miser loans money at an annual rate of 19 percent interest with daily compounding. what is the effective annual

  How much more would a call option on pounds be

Assuming the same initial values for the dollar/pound cross rate in the FX Option Pricing workbook, how much more would a call option on pounds be.

  Discuss and interpret financials in relation to initiative

Discuss and interpret the financials in relation to the initiative

  Under the fixed exchange rate system, what was the currency

Under the fixed exchange rate system, what was the currency against which all other currency values were defined? Why?

  Calculate return on equity using the dupont system

Calculate Return on Equity (ROE) using the DuPont system. Assess management performance by calculating Economic Value Added (EVA).

  What is the true interest cost of the commercial paper

The company has a 90 day commercial paper at a 6.50% discount rate. The cost is 0.25% per year. What is the true interest cost of the commercial paper (APY), including the cost of the backup line?

  How sensitive is the npv to changes in the quantity sold

Changes in NWC will thus first occur in Year 1 with the first year's sales. How sensitive is the NPV to changes in the quantity sold

  Interpret these banks credit quality over 2006-2014

What is the difference between lending to individual borrowers via a residential home mortgage compared to other types of consumer lending

  What is the cash outflow for december

The table contains the Sales estimates for the next year. The Purchases are 63% of Sales. Purchases are paid in the following month.

  Identify and present a description of actual capital project

For your first topic in this conference I would like for you to briefly review either your personal experiences and/or the financial literature to identify and present a description of one actual capital project.

  What is the average daily float

Calculating Float. In a typical month, the Gulley Corporation receives 100 checks totaling $59,200. These are delayed three days on average.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd