Calculate project payback period and internal rate of return

Assignment Help Financial Management

Reference no: EM131188675

Hurdlevack Ltd relies on the payback method of project evaluation, requiring that investments repay capital within three years. The board are currently considering the four projects listed below: (ignore tax) (a) Calculate each project's payback period and state which alternative should be accepted based on this criterion. (b) Calculate each project's internal rate of return (IRR) and using a hurdle rate of 15%, state which of the opportunities is acceptable by this criterion. (c) Discuss the possible reasons why the above two project appraisal methods do not give answers which are consistent with each other, for the accept/reject decision. Which should the board employ? Why? (d) Discuss some of the elements which should be considered when determining the appropriate hurdle rate for an individual project?

Project A B C D

Sales. 40,000. 75,000. 60,000. 60,000

Direct costs 16,000. 27,000. 15,000. 18,000

Depreciation 8,000. 40,000. 30,000. 35,000

Interest. 12,000. 16,000 9,000. 7,000

Initial Investment120,000. 160,000. 90,000. 70,000

Project life. 10. 10. 18. 15

Reference no: EM131188675

Questions Cloud

What is the ratio of the distance to the nearest galaxy : What is the ratio of the distance to the nearest galaxy to the diameter of the Milky Way Galaxy? This is typical of the distances between galaxies as compared to their diameters.

Calculate the wavelength of the waves on the string : Let's consider traveling waves that are generated on a string by an oscillator with a period of 1.52×10-4s. Assuming the speed of the waves to be 575 m/s, Calculate the wavelength of the waves on the string. At what frequency should the oscillator..

Prepare a one to two page analysis of the article below : Prepare a one to two page analysis of the article below. Be sure to include the topic (determinants of equilibrium wages and having an educations vs no education for jobs), the author's main point or argument, and your analysis of the author's co..

How many seconds from the time the driver : A) How many seconds from the time the driver of the blue car first noticed it until the red car passes the blue car? B) How much farther down the road will the blue car travel in this time?

Calculate project payback period and internal rate of return : Hurdlevack Ltd relies on the payback method of project evaluation, requiring that investments repay capital within three years. Calculate each project's payback period and state which alternative should be accepted based on this criterion. Calculate ..

Is it permissible to torture a person : IS IT PERMISSIBLE TO TORTURE A PERSON- Present a main argument in standard form with each premise and the conclusion on a separate line.

How far has he traveled since noon : Starting at noon, John drives north along a highway at a speed of 70 m/hr until 2:30 pm. How far has he traveled since noon?

Identify point at which productive efficiency is achieved : Comparative effectiveness analysis can help the movement towards productive efficiency (point B), while cost-effectiveness analysis would identify the point at which productive and allocative efficiency is achieved (point C).

Important impact on economic activity : What three legal doctrines had an important impact on economic activity during the first period of US national development? Explain their impact?

User Account

All Pages