What is Project A discounted payback

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Question - Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 12%.

 

0

1

2

3

4

Project A

1,100

700

365

250

300

Project B

1,100

300

300

400

750

Required -

1. What is Project A's payback?

2. What is Project A's discounted payback?

3. What is Project B's payback?

4. What is Project B's discounted payback?

Reference no: EM132796188

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