What are projects payback and discounted payback periods

Assignment Help Financial Management
Reference no: EM131014115

You are considering a project with an initial cash outlay of $80,000 and expected cash flows of $20,000 at the end of each year for six years. The discount rate for this project is 10 percent.

a. What are the project’s payback and discounted payback periods?

b. What is the project’s NPV?

c. What is the project’s PI?

d. What is the project’s IRR?

Reference no: EM131014115

Questions Cloud

Considering an investment in a new distribution center : In the spring of 2015, Jemison Electric was considering an investment in a new distribution center. Jemison's CFO anticipates additional earnings before interest and taxes (EBIT) of $100,000 for the first year of operation of the center, and, over th..
Pharmaceutical company that has developed new drug : You work for a pharmaceutical company that has developed a new drug. the patent of the drug will last 17 years. You expect that the drugs profits will $5 million dollars in its first year and that this amount will grow at a rate of 2% per year for th..
What is the npv of the investment : Dickinson Brothers, Inc., is considering investing in a machine to produce computer keyboards. The price of the machine will be $982,000, and its economic life is five years. The machine will be fully depreciated by the straight-line method. What is ..
Pharmaceutical company that has developed new drug : You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 17 years. You expect that the drug's profits will be $5 million in its first year and that this amount will grow at a rate of 2% per year for the ne..
What are projects payback and discounted payback periods : You are considering a project with an initial cash outlay of $80,000 and expected cash flows of $20,000 at the end of each year for six years. The discount rate for this project is 10 percent. What are the project’s payback and discounted payback per..
Money by taking advantage of the efficient market hypothesis : Dimensional Fund Advisors is an investment consulting firm that is a believer in market efficiency. How does this firm make money by taking advantage of the Efficient Market Hypothesis?
What is the next dividend you would receive : The common stock of Old Betsy Flags is constantly selling for $28 per share. The company has been growing at a constant annual rate of 4%, and this growth is expected to continue for an infinite period. The required rate on the stock is 11%. If you b..
Growth is expected to continue for an infinite period : The common stock of Old Betsy Flags is constantly selling for $28 per share. The company has been growing at a constant annual rate of 4%, and this growth is expected to continue for an infinite period. The required rate on the stock is 11%. If you b..
Describe a capital budgeting project : Describe a capital budgeting project (i.e., an investment in fixed assets). Make sure that the project has an initial investment in Year 0, followed by a series of annual cash flows for at least seven (7) years. In addition, determine the discount ra..

Reviews

Write a Review

Financial Management Questions & Answers

  What is the value of the firms operations

Young's free cash flow during the just-ended year (t=0) was $100 million, and FCF is expected to grow at a constant rate of 5% in the future. If the weighted average cost of capital is 15%, what is the value of the firm's operations?

  Prospective buyer has estimated the expected cash flows

Suppose an investor is interested in purchasing the following income producing property at a current market price of $450,000. The prospective buyer has estimated the expected cash flows over the next four years to be as follows:

  Consider the spot interest rates for maturities

Consider the following spot interest rates for maturities of one, two, three, and four years. r1 = 4.6% r2 = 5.2% r3 = 5.9% r4 = 6.7% Assuming a constant real interest rate of 2 percent, what are the approximate expected inflation rates for the next ..

  What is the federal funds rate and target rate

What is the federal funds rate? What is the federal funds target rate? What is federal funds effective rate? The FOMC uses the open market operation to ensure that the effective federal funds rate fluctuates closely around the target. What is the cur..

  Considering investing in one of two economies

You are a risk-averse investor who is considering investing in one of two economies. The expected return and volatility of all stocks in both economies is the same. In the first economy, all stocks move together in good times all prices rise together..

  Domestic mutual fund has beta coefficient

What does it mean if a domestic mutual fund has a beta coefficient of 1.25, an alpha coefficient of 2.25 and an R-Square of 75. Explain each measurement and then interpret what these measurements mean for this mutual fund

  What tax issues-salary supplement

Andree is about to graduate college with a management degree. She has been offered a job as a sales representative for a pharmaceutical company. The job will require significant travel and entertainment expenses for which she will be given a salary s..

  What effective annual interest rate does the firm

A firm offers terms of 1.4/10, net 60. a. What effective annual interest rate does the firm earn when a customer does not take the discount? (Use 365 days a year. What effective annual interest rate does the firm earn if the terms are changed to 1.4/..

  What is cost of existing-new preferred stock respectively

A firm's preferred stock is selling for $27.50 a share. The firm nets $25.60 after issuance costs. The stock pays an annual dividend of $3.00 per share. What is the cost of existing, and new, preferred stock respectively?

  In terms of things going in your favor for an organization

In terms of things going in your favor for an organization, are there any specific financial tools, measurements, financial results that can be observed in order to evaluate whether or not a company is becoming too overextended in the area of leverag..

  Considering a project with the cash flows

Simplicity Printers is considering a project with the following cash flows: Initial Outlay = $126,000 Cash Flows: Year 1 = $34,000 Year 2 = $69,000 Year 3 = $64,000 If the appropriate discount rate (WACC) is 11.5%, compute the NPV of this project.

  How many units must be sold to achieve the target profit

Crow, Inc., a not-for-profit company, has a product contribution margin of $40. The fixed costs are $800,000. Crow, Inc., has set a target profit of $35,000 per year. A. What is the breakeven point in units? B. How many units must be sold to achieve ..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd