Solution-Required payback period of three years

Required payback period of three years

Reference no: EM133119147

Abbie's Attic Antiques is considering a project has a required payback period of three years. Which one of the following statements is correct concerning Abbie's payback analysis of this project?

The cash flows in each of the three years must exceed two-thirds of the project's initial cost if the project is to be accepted.

The cash flow in the final year of the project is ignored.

The project's cash flow in year three is discounted by a factor of (1 + R)3.

The cash flows in the second and third years are valued just as highly as the cash flow in the first year.

The project should be accepted if the payback period is equal to or greater than three years.

Reference no: EM133119147

Questions Cloud

Prepare a statement of changes in equity for the year ended : Prepare a Statement of Changes in Equity for the year ended 30th June 2023 assuming profit for the year to be transferred to Retained Earnings was $450,000

What is the payoff for a put option : 1. What is the payoff for a put option with a strike price of $50 if the stock price at expiration is $46? What if the stock price is $55? If the stock price at

Dimension of openness to experience : What might be some reasons the dimension of "openness to experience" correlates so strongly with historians' ratings of the greatest U.S. presidents

Yield to maturity on a 7-year bond : Bond X is noncallable, has 10 years to maturity, a 5% annual coupon, and a $1,000 par value. Your required return on Bond X is 8%, and if you buy it, you plan t

Required payback period of three years : Abbie's Attic Antiques is considering a project has a required payback period of three years. Which one of the following statements is correct concerning Abbie'

Find the amortization expense : Purchased patent on January 1, 2021 for P2,400,000 and was expected to be a source of net cash inflows for at least 15 years. Find the amortization expense

Analyzing a proposed project : Precise Machinery is analyzing a proposed project. The company expects to sell 2,100 units, give or take 5 percent. The expected variable cost per unit is $260

Advantages and disadvantages of the credit rating : Discuss the advantages and disadvantages of the credit rating methods designed by Fitch

What is the profitability index of project : Tempest Industries Inc. is considering a 13-year project that requires an initial investment of $50 million. The project provides no annual cash inflow for the

User Account

All Pages

Required payback period of three years

Reference no: EM133119147

Reference no: EM133119147

Questions Cloud

Reviews

Write a Review

Finance Basics Questions & Answers

Financial reporting and analysis

A report on financial accounting

Describe the types of financial ratios

Differences between sole proprietorship and corporation

Prepare a cash budget statement

What are the implied interest rates

State pricing theory and no-arbitrage pricing theory

Small business administration

Effect of financial leverage

Evaluate the basis for the payment to the lender

Importance of opps, ipps, mpfs and dmepos

Time value of money

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT