What will be the payback period for this project

Assignment Help Accounting Basics
Reference no: EM133111197

Question - A firm is considering an investment project. The project requires an initial investment of $500,000 and will have no residual value at the end of 5 years. The cost of capital (borrowing) is 10%. The project will generate the following profits:

Year 1 $50,000

Year 2 $100,000

Year 3 $150,000

Year 4 $150,000

Year 5 $150,000

Required -

(a) What will be the payback period for this project (in year's to two decimal places)?

(b) If the firm has established a payback period of 4 years, should the project be accepted?

Reference no: EM133111197

Questions Cloud

Calculate the price return of the bond and the income : For the same bond in prob, assuming the new yield of the bond one year from today is 4%. Perform the following calculations:
Construct a 2-stock portfolio by investing : Given the following probability distributions for Stocks A and B, and the market portfolio, M:
Market capitalization of the market portfolio : The share prices for stocks A and B are $25 and $5, respectively. What is the market capitalization of the market portfolio?
Determine market value for residential investment property : Three recent sales of rental properties recorded in a similar location, as follows:
What will be the payback period for this project : The project requires an initial investment of $500,000 and will have no residual value at the end of 5 years. What will be the payback period for this project
Spot price for the 6-month : At the beginning of December, the 3-month T-Bill futures for March is priced at 99 (actual price, not the annualized, discount basis price), the spot 3-month T-
What will the ipo price : CNR is listed on the stock exchange thanks to an open price offer (Dutch Auction). The investment bank in charge of the operation received the following buy ord
What is the amount of cash flow from operating activities : The company collected $45,000 cash from accounts receivable. What is amount of cash flow from operating activities that appear on Year 2 statement of cash flows
Latest financial position and performance of rightmove : Your good friend Roger has just been offered a job with Rightmove but knows very little about accounting. Please write a report to Roger analysing the latest fi

Reviews

Write a Review

Accounting Basics Questions & Answers

  Calculate the ending balance of each phone accounts

Calculate the ending balance of each phone accounts after journal entries are posted utility expense $365 accounts payable 3 and 65 hours number

  How much did shareholders initially invest in the business

Baltimore Company reports total assets and total liabilities of $236,000 and $85,000, How much did shareholders initially invest in the business

  Find what is the price for johnson marine

If Johnson determines prices so as to received a desired return on assets of 15%, the price is? Variable Selling and Administrative: 750,000

  What is melanies office in the home deduction b suppose

melanie is employed full-time as an accountant for a national hardware chain. she also has a private consulting

  Find what is current yield and current bond price

Interest is paid semiannually, and the bond has 20 years to maturity. If investors require a 12% yield, what is the current bond price? What is current yield

  In what way can the use of roi as a performance measure

in what way can the use of roi as a performance measure for investment centers lead to bad decisions? how does the

  What is the reason behind adding goodwill in cash account

What is the reason behind adding goodwill in cash account in few solutions and not adding them in a cash account in some questions?

  What type of point of purchase materials for promotion

What type of point of purchase materials for promotion should be used in Wally's store to promote the Aeronaut

  Determine analysis of financial statements

Gina Jaimes believes that the analysis of financial statements is directed at two characteristics of a company: liquidity and profitability. Is Gina correct?

  Expected returns on assets and certainty equivalent

What is the expected return of this asset? What is Esperanza's expected utility? What is her certainty equivalent? Suppose that Esperanza can purchase insurance that guarantees her a return of $4900 regardless of the return on the asset.

  How much is the sales volume variance

Baryans Corporation provided the following partial income statements and detailed information for the past two years: How much is the sales volume variance

  Sandstrom corporation has an extraordinary loss of 150000

sandstrom corporation has an extraordinary loss of 150000 an unusual gain of 105000 and a tax rate of 40. at what

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