What is payback period for each project

Assignment Help Financial Management

Reference no: EM131913306

Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$430,000 –$42,500 1 41,500 20,900 2 64,500 12,800 3 81,500 21,100 4 545,000 17,900 The required return on these investments is 10 percent. Required: (a) What is the payback period for each project? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) Payback period Project A years Project B years (b) What is the NPV for each project? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) Net present value Project A $ Project B $ (c) What is the IRR for each project? (Do not round intermediate calculations. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16).) Internal rate of return Project A % Project B % (d) What is the profitability index for each project? (Do not round intermediate calculations. Round your answers to 3 decimal places (e.g., 32.161).) Profitability index Project A Project B

Reference no: EM131913306

Questions Cloud

What is the company debt-equity ratio : Richard has a weighted average cost of capital of 10.0 percent. What is the company's debt-equity ratio?

Firm is considering investing in project with cash flows : Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 7%.

Firm value-what is the current value of the company : hat is the current value of the company? What will the value of the firm be if the company takes on debt equal to 60 percent of its levered value?

Net asset value and gross and net leverage of portfolio : what is the 1) Net Asset Value 2) Gross and Net Leverage of portfolio on close of 1/1/2017.

What is payback period for each project : What is the IRR for each project? What is the NPV for each project? What is the payback period for each project?

Goldrich obtained note from curtis by fraudulent means : Goldrich obtained a note from Curtis by fraudulent means. Suppose that Madson transfers the note back to Goldrich. Discuss Curtis’s and Goldrich’s positions.

Compute payback statistic for project : Compute the payback statistic for Project A if the appropriate cost of capital is 8 percent and the maximum allowable payback period is four years.

Calculate what the oil producer should do immediately : Solve a decision tree to calculate what the oil producer should do immediately, at the end of year 1, and at the end of year 2

What is the price per share of the company stock : Ward Corp. is expected to have an EBIT of $2,750,000 next year. What is the price per share of the company's stock?

User Account

All Pages