Using the discounted payback period method

Assignment Help Financial Management

Reference no: EM131497701

You are CEO of Acme, Inc. located in the United States. You use the discounted payback period method and accept all projects that payback in three years. You are considering a project that will cost $5,500,000 and will produce one cash flow that occurs in three years. However, the cash flow is in pesos since the project is an overseas project. The current indirect exchange rate is 13.5 pesos per dollar. The cash inflow in pesos is 100,000,000 in three years, and the discount rate is 11.5%. During this time, the anticipated annual inflation rate is 5% in the United States and 4% in Mexico. A. Should you accept this project, using the discounted payback period method? B. Is this a good decision? Provide the six (6) steps you would utilize to determine whether or not this is a good decision.

Reference no: EM131497701

Questions Cloud

What is the equilibrium quantity supplied and demanded : What is the equilibrium quantity supplied and demanded? Calculate the consumer surplus at the equilibrium price.

Discuss the precedence diagram : Redraw the precedence diagram of Figure adding the relationships given below. Enter the early start, late start, early finish, late finish, and total float.

Explain the difference between soluble and insoluble fibers : Explain the difference between soluble and insoluble fiber, stating how the difference can be applied to food selection and consumption so as to improve health.

How much must you invest in the market portfolio : how much must you invest in the risk-free asset and how much must you invest in the market portfolio?

Using the discounted payback period method : Should you accept this project, using the discounted payback period method?

How might insufficient or excessive amounts of proteins : How might insufficient or excessive amounts of proteins, carbohydrates, fats, or fiber contribute to health or illness? Provide examples.

Prepare an activity-time tabulation showing early start : Problem: Redraw the accompanying network diagram, adding early and late event times to the diagram. Mark the critical path.

What is the law in massachusetts governing citizens arrests : what is the law in Massachusetts governing "citizen’s arrests"?

What is the expected return on the market portfolio : What is the expected return on the market portfolio?

User Account

All Pages