Calculate the discounted payback period for the project

Assignment Help Finance Basics

Reference no: EM133664238

Problem

Once again consider the investment project from Question 7 where QAN is considering a project that requires an initial investment of $800m now, but that is expected to generate free cash flows of $300m, $350m and $400m over the next three years. Again, assume an appropriate discount rate for QAN is 11%.

1. Calculate the discounted payback period (DPBP) for this project. If QAN management require a payback period of two years, should QAN accept or reject the project? Explain your answer.

2. If you used non-discounted cash flows to calculate the payback period, would you be more likely, or less likely to accept the project? Explain your answer.

3. Given your answers to the DPBP calculation in this question and the NPV calculation in Question 7, do you think QAN should go ahead with the project or not? Explain your answer.

Reference no: EM133664238

Questions Cloud

What dollar gain or loss do you experience on your capital : Consider a levered investment in AMD stock. What dollar gain or loss do you experience on your $10,000 capital?

Calculate the weighted average cost of capital for qan : Calculate the weighted average cost of capital (WACC) for QAN. Say QAN has before tax free cash flow (FCF) per share of $0.50.

Difference that you think made the biggest impact : Describe the difference that you think made the biggest impact between the negative and positive experiences. (Any responses that are not respective

What are help children with cerebral palsy manage spasticity : Explain what are the different approaches to help children with cerebral palsy manage spasticity?

Calculate the discounted payback period for the project : Calculate the discounted payback period (DPBP) for this project. If QAN management require a payback period of two years, should QAN accept or reject project?

Calculate valuation for qan shares today using mixed growth : Calculate the valuation for QAN shares today using the mixed growth dividend discount model (DDM). Explain what would happen to your valuation if you Increased.

Provide a list of at least 6 items with their associated : Match them to the products you can find at home (e.g., deoderant, frying pan, light bulb, house pipes, door handlle, camera, table salt). Provide a list of

Find in common household items : find in common household items. Use this, and other properties of the minerals (such as hardness, color, etc), to match them to the products you can

What percent comes from the return on their investment : Coffee costs $5, the person buys 250 cups of coffee per year, the return on investment. What percent of the $106,000 comes from the return on their investment?

User Account

All Pages