Calculate the pay-back period for each project

Assignment Help Finance Basics

Reference no: EM131489200

Question: Strategic decision makers are required to be able to evaluate projects based on the long-term objectives of the firm as well as the project's ability to earn the company additional compensation. The 3 main tools used to make this evaluation are the pay-back period, net present value (NPV), and internal rate of return (IRR).

Year	Project #1	Project #2	Project #3
0	($30,000)	($32,000)	($35,000)
1	$11,000	$15,000	$11,000
2	$11,000	$14,000	$11,000
3	$11,000	$11,000	$11,000
4	$11,000	$2,000	$11,000
5	$11,000	$500	$11,000

Scenario	NPV Rate
1	5%
2	5.5%
3	6%

Using the data in the tables above, answer the following questions:

- Calculate the NPV for each project using each scenario's NPV rate. Show your work.

- Calculate the pay-back period for each project. Show your work.

- Calculate the IRR for each project. Show your work.

- Which project would the company select using the NPV method in scenario 1? Explain your answer.

- Which project would the company select using the NPV method in scenario 2? Explain your answer.

- Which project would the company select using the NPV method in scenario 3? Explain your answer.

- Which project would the company select using the pay-back period? Explain your answer.

- Which project would the company select using the IRR method? Explain your answer.

Reference no: EM131489200

Questions Cloud

Ratio analysis of ramsay healthcare pvt ltd : RATIO ANALYSIS OF RAMSAY HEALTHCARE PVT LTD. This assignment is a team task which involves self-learning, some 'real world' research and team-work skills

Discuss the six-step risk management process : Using the traditional, six-step Risk Management Process described in the module and this week's readings, go through the process using CSU-Global as your model.

Has management identified correct amount of money required : Has management identified correct amount of money required? What is runway for this business if they get the investment? What is the runway without investment?

New computer system can be purchased : If a new computer system can be purchased for $25,000 and will be depreciated using MACRS 3-year rates, and will save your firm $10,000 per year in labor costs

Calculate the pay-back period for each project : Strategic decision makers are required to be able to evaluate projects based on the long-term objectives of the firm as well as the project's ability to earn.

What is current price for the del monte bonds : what is the current price for the Del Monte bonds?

Wealth protection-insurance planning : Boon Teck has savings of $35,000 and shares worth $78,000. What is the additional amount of life insurance that Boon Teck needs?

Rewards and compensation plan for ford motor company : Can you help me design a rewards and compensation plan for Ford Motor company? 12 pages plus a launch timeline?

Describe the financial performance of the organization : Managed Care Contracting and Ratio Analysis- From scenario, interpret the operating indicators used to Describe the financial performance of the organization.

User Account

All Pages