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 8 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3.5 and 4.5 years, respectively. Time: 0 1 2 3 4 5 6 Cash flow: -$4,900 $1,260 $2,460 $1,660 $1,660 $ 1,460 $1,260 Use the NPV decision rule to evaluate this project. (Do not round intermediate calculations and round your final answer to 2 decimal places.) 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 12 percent, and that the maximum allowable payback and discounted payback statistics for your company are 2.5 and 3.0 years, respectively. Time: 012345 Cash flow -$228,000 $65, 100 $83,300 $140,300 $121,300 $80, 500 Use the discounted payback decision rule to evaluate this project. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Compute the NPV statistic for Project U if the appropriate cost of capital is 11 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places.) Project U Time: 012345 Cash flow: -$1,250 $450 $1,730 -$570 $400-$150 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 10 percent, and that the maximum allowable payback and discounted payback statistics for your company are 3.0 and 3.5 years, respectively. Time: 0 1 2 3 4 5 Cash flow: -$245,000 $66, 800 $85,000 $142,000 $123,000 $82,200 Use the payback decision rule to evaluate this project. (Round your answer to 2 decimal places.)
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 8 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3.5 and 4.5 years, respectively. Time: 0 1 2 3 4 5 6 Cash flow: -$4,900 $1,260 $2,460 $1,660 $1,660 $ 1,460 $1,260 Use the NPV decision rule to evaluate this project. (Do not round intermediate calculations and round your final answer to 2 decimal places.) 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 12 percent, and that the maximum allowable payback and discounted payback statistics for your company are 2.5 and 3.0 years, respectively. Time: 012345 Cash flow -$228,000 $65, 100 $83,300 $140,300 $121,300 $80, 500 Use the discounted payback decision rule to evaluate this project. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Compute the NPV statistic for Project U if the appropriate cost of capital is 11 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places.) Project U Time: 012345 Cash flow: -$1,250 $450 $1,730 -$570 $400-$150 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 10 percent, and that the maximum allowable payback and discounted payback statistics for your company are 3.0 and 3.5 years, respectively. Time: 0 1 2 3 4 5 Cash flow: -$245,000 $66, 800 $85,000 $142,000 $123,000 $82,200 Use the payback decision rule to evaluate this project. (Round your answer to 2 decimal places.)
Chapter11: Capital Budgeting And Risk
Section: Chapter Questions
Problem 20P
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Transcribed Image Text: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 8 percent, and that the maximum allowable payback and discounted payback statistics for
the project are 3.5 and 4.5 years, respectively. Time: 0 1 2 3 4 5 6 Cash flow: -$4,900 $1,260 $2,460 $1,660 $1,660 $
1,460 $1,260 Use the NPV decision rule to evaluate this project. (Do not round intermediate calculations and round your
final answer to 2 decimal places.) 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 12 percent, and that the maximum allowable
payback and discounted payback statistics for your company are 2.5 and 3.0 years, respectively. Time: 0 1 2 3 4 5 Cash
flow -$228,000 $65, 100 $83,300 $140, 300 $121,300 $80, 500 Use the discounted payback decision rule to evaluate
this project. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Compute the NPV
statistic for Project U if the appropriate cost of capital is 11 percent. (Negative amount should be indicated by a minus
sign. Do not round intermediate calculations and round your final answer to 2 decimal places.) Project U Time:
012345 Cash flow: -$1,250 $450 $1,730-$570 $400 - $150 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 10 percent, and that the
maximum allowable payback and discounted payback statistics for your company are 3.0 and 3.5 years, respectively.
Time: 0 1 2 3 4 5 Cash flow: -$245,000 $66,800 $85,000 $142,000 $123,000 $82,200 Use the payback decision rule to
evaluate this project. (Round your answer to 2 decimal places.)
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