How long will it take for bill to recoup initial investment

Assignment Help Financial Accounting

Reference no: EM133434249

Long-term investment decision, payback method

Bill Williams has the opportunity to invest in project A that costs $9,000 today and promises to pay annual end-ofyear payments of $2,200, $2,500, $2,500, $2,000, and $1,800 over the next 5 years. Or, Bill can invest $9,000 in project B that promises to pay annual end-of-year payments of $1,500, $1,500, $1,500, $3,500, and $4,000 over the next 5 years.

a. How long will it take for Bill to recoup his initial investment in project A?

b. How long will it take for Bill to recoup his initial investment in project B?

c. Using the payback period, which project should Bill choose?

d. Do you see any problems with his choice?

P10-10 NPV-Mutually exclusive projects

Hook Industries is considering the replacement of one of its old drill presses. Three alternative replacement presses are under consideration. The relevant cash flows associated with each are shown in the following table. The firm's cost of capital is 15%.

Reference no: EM133434249

Questions Cloud

Write a long summary about the movie outsourced : Write a long summary about the movie "Outsourced". Be sure to include a title, a strong thesis about the primary theme of the movie, and the most important

How fiscal and monetary policies can be used to stabilize : How fiscal and monetary policies can be used to stabilize the economy. Suppose the US economy has gone into recession. Which fiscal and monetary policy

How can simulation solve common business problems : what is simulation? How can simulation solve common business problems? How can simulation solve common business problems? What are the advantages

Optimistic new communication technology position : From a optimistic new communication technology position, Do you think the rapid and sometimes amazing advances we are seeing

How long will it take for bill to recoup initial investment : How long will it take for Bill to recoup his initial investment in project A? b. How long will it take for Bill to recoup his initial investment in project B

How dj kool herc change the history with his knowledge : How DJ Kool Herc change the history with his knowledge of music and kids? How has hip hop become so much more than the music?

Compare market entry by company into industrialized region : Compare market entry by a company into an industrialized region such as the EU with market entry into a developing country such as Brazil.

Definition of the appraisal methodologies : Provide a definition of the three Appraisal methodologies for (1) Sales Comparable Approach, (2) Income Approach, and (3) Cost Approach

What are the signs and symptoms of asd : What is ASD? How is it diagnosed? What are the signs and symptoms of ASD? What are the current ASD diagnosis statistics?

User Account

All Pages