Answered: 1-What is the payback period for each…

1-What is the payback period for each project? Project A Project B years years 2.What is the NPV for each project? Project A Project B 3. What is the IRR for each project? Project A Project B % %

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 19EB: Wallace Company is considering two projects. Their required rate of return is 10%. Which of the two...

See similar textbooks

Related questions

Q: a) Calculate the payback period for each project. The maximum allowable payback period set by the…

A: a) The payback period is the time you need to recover the cost of your investment. In simple, it is…

Q: (Payback period, net present value, profitability index, and internal rate of return calculations)…

A: Capital budgeting techniques are the methods that are being adopted by a company to evaluate various…

Q: If the opportunity cost is 11%, which of these projects is worth pursuing? Year Project A…

A: To determine which project is worth pursuing, we need to determine the net present value of each…

Q: Consider the financial data for a project given in the table below. Initial investment $70,000…

A: Internal Rate of Return is the rate at which the Net Present Value of a project becomes zero. It can…

Q: Payback Period - What are the Payback Periods of Projects E, F. G and H? Assume all cash flows are…

A: Payback period is the time required to recover the funds used in an investment. It is a method in…

Q: A sum of $10,000 now (time 0) is invested into a project. The investor expects to earn the…

A: Present Value = -10,000 Earnings Rate = 4% Present Value = [Cash Flow 1 / (1+earning rate%)^1] +…

Q: Following table shows the initial investment required in and cash flow (return) from a project…

A: Capital Budgeting Techniques are used to choose the most profitable investment alternative. Based on…

Q: Calculate the internal rate of return for a project that requires $100,000 initial investment and…

A: Internal Rate of Return is a capital budgeting technique used to evaluate the viability of the…

Q: lease calculate the payback period, IRR, MIRR, NPV, and PI for the following two mutually exclusive…

A: PART 1 Payback period: It is the number of years it will take to pay the initial cash outflow.…

Q: Payback period. What are the payback periods of projects E and F in the following table: E ? Assume…

A: Payback period is the amount of time the project takes to recover its cost of investment. formula:…

Q: a-1. What is the payback period on each project? (Do not round intermediate calculations. Round your…

A: Payback Period: It is the period in which an investment or project recovers its initial cost. The…

Q: An investment project has an initial cost of $260 and cash flows $75, $105, $100, and $50 for years…

A: First step in the computation of discounted Payback period is the computation of present values of…

Q: e company for all projects is 3 years. b) Calculate the net present value (NPV) for each project…

A: The payback period refers to the time required by an investment to cover its initial investment.…

Q: MIRR A project has an initial cost of $65,000, expected net cash inflows of $13,000 per year for 7…

A: The MIRR is calculated as the compounded growth rate of ratio of future value of cash inflows and…

Q: 4. Engineering company has a project and the project capital is 60000 RO. The interest compounded…

A: Profit refers to surplus of revenue over the expenses of the business enterprise. It is the core…

Q: 1- Evaluate the following projects using the payback method assuming a rule of 3 years for payback.…

A: Given information : Year Project A Project B 0 -10000 -10000 1 4000 4000 2 4000 3000 3…

Q: How would i solve #3

A: 1. Calculate the payback period for each year.

Q: 2. Determine Project Y's payback period Project Y Numerator: Initial investment $ Payback Period 1…

A: Capital budgeting The process that involves the allocation of funds into a firm's long-term…

Q: A project has an initial cost of $40,000, expected net cash inflows of $9,000 per year for 7 years,…

A: The Internal rate of return is one of the capital budgeting method under which the projects are…

Q: The profitability index of a certain project is 1.2 with an investment of P 56,600. Cost of capital…

A: The profitability index (PI) is a financial tool to measure the profitability of a proposed…

Q: Project's Cash Flow ($) D -82, 500 -83, 500 -$2,800 -$2, 300 1,600 -1,800 -1,000 2.800 -900 1.900 3…

A: The payback period refers to the period that is required to recover the initial cost. With the help…

Q: The Table Q3 shows the cash flow for a project over 6 years. Using the simple payback method, graph…

A: The break-even point and payback period: The accounting period in which a corporation makes enough…

Q: Payback period. What are the payback periods of projects E and F? Assume all the cash flow is…

A: Payback period is time required to recover initially investment of PROJECT.

Q: Using the below informtion answer: 5.1 Payback Period of Project Tan (expressed in years, months…

A: The payback period is a method of finding out the profitability of a project. It calculates the time…

Q: Part 1 Please calculate the payback period, IRR, MIRR, NPV, and PI for the following two mutually…

A: Net present value(NPV) is the difference between the present value of cash inflows and present value…

Q: f a project requires an initial current investment of £200 and promises to raise £133.1 after three…

A: Current investment = £200 Cash inflow after 3 years = £133.1 Interest rate = 10% Present value of…

Q: A project has an initial cost of $40,000, expected net cash inflows of $9,000 per year for 7 years,…

Q: 10. Individual C invested in a project with a payback period of 6 years. The project brings $18,000…

Q: Determine the B/C ratio for the following project. First Cost P100, 000 Project life, years 5…

A: B/C ratio known as the benefit-cost ratio is computed by calculating the present value of benefits…

Q: Calculate the payback period for each project Year Project A ($) Project B ($) Project C ($) 0…

A: Payback period is the time it takes for a project to pay back its investment amount in the form of…

Q: Two mutually exclusive projects are under consideration. Year Project A Project B -$5,000 -$10,000 1…

Q: Suppose a Project which required Initial Investment of $ 40,000 and will pay you $10,000, $12,000,…

A: The question is related to Capital Budgeting. As per the question we will calculate the pay back…

Q: A project has an initial cost of $40,000, expected net cash inflows of $9,000 per year for 7 years,…

A: Solution:- We know, Net Present value (NPV) means the net present value of cash inflows after…

Q: Consider the following investment projects for SDL Engineering. All of the projects have a…

A: Net present worth is the present value of future cashflows

Q: 9) A project has an initial cost of $65,000, expected net cash inflows of $11,000 per year for 9…

A: Payback period: It is the duration within which the initial cost of a project is recovered.

Q: Consider the following investment projects for SDL Engineering. All of the projects have a…

A: Present worth is the worth of an investment in today’s time. Present worth can be calculated by…

Q: Project 1 involves an outlay of $2.5m and gets an annual net income of $1m for 5 years. Project 2…

A: Here, Note: Formula used of ARR is Average Net Income/ Average Investment.

Q: future

A: Thanks for the question. Value engineering is a management related question. Calculating the future…

Q: b) What is the payback period on each of the following projects? Cash Flow in Dollars Project Time 0…

A: As per bartleby guidelines, "Since you have posted a question with multiple sub-parts, we will solve…

Q: a) Find the PP and NPV of the following projects. Assume that the projects' cost of capital (or…

A: a) The computation of NPV: Hence, the NPV is $70.36

Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

1-What is the payback period for each project?
Project A
Project B
years
years
2.What is the NPV for each project?
Project A
Project B
3. What is the IRR for each project?
Project A
Project B
%
%

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Step 5

Step 6

Step 7

Step 8

Step 9

Step 10

Trending now

This is a popular solution!

Step by step

Solved in 10 steps with 7 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Wallace Company is considering two projects. Their required rate of return is 10%. Which of the two projects, A or B, is better in terms of internal rate of return?
a) Calculate the payback period for each project. The maximum allowable payback period setby the company for all projects is 3 years. b) Calculate the net present value (NPV) for each project c) Calculate the profitability index (PI) for each project d) Calculate the internal rate of return (IRR) for each project. e) Based on the answer in (a) – (d), explain briefly which project should be accepted. f) If the project is independent project, how would your answer change in part (e) Note: 1. I need only e,f no question answer. only e and f 2. No need excel formula
Consider the following two mutually exclusive projects. Time Project A Project B 0 -$300 -$405 1 -$387 $134 2 -$193 $134 3 $100 $134 4 $600 $134 5 $600 $134 6 $850 $150 7 $180 $284 What is each project’s payback, discounted payback, IRR, and NPV with a cost of capital of 12%? Which project should be selected?
a) Calculate the payback period for each project. The maximum allowable payback period setby the company for all projects is 3 years. b) Calculate the net present value (NPV) for each project c) Calculate the profitability index (PI) for each project d) Calculate the internal rate of return (IRR) for each project. e) Based on the answer in (a) – (d), explain briefly which project should be accepted. f) If the project is independent project, how would your answer change in part (e) Note: I need only e,f no question answer. only e and f
i) Calculate the payback period for each project. ii) Calculate the net present value (NPV) for each project.
The following information relates to machines A and B. Year Machine A Machine B Shs Shs 0 (100,000) (120,000) 1 60,000 50,000 2 40,000 50,000 3 20,000 50,000 Find the Internal Rate of Return (IRR) of the project at rates 10%)
3e.a.Determinethe payback period for each b.Calculatethe net present value (NPV) for each c.Calculatethe profitability index (PI) for each project. d.Calculatethe internal rate of return (IRR) for each e.Basedon ALL your answers above, explain briefly which project should be Note: i just need (e) no question answer not all no need excle formula , thank you
You are considering the following two mutually exclusive projects. The required rate of return is 11.25% for project A and 10.75% for project B. Which project should you accept? YEAR PROJECT A PROJECT B 0 -$48,000 -$126,900 1 $18,400 $69.700 2 $31,300 $80,900 3 $11,700 $0
Compute the IRR, NPV, Pi, and payback period for the following two projects. Assume the required return is 10%. Year Project A Project B 0 $-200 $-150 1 $200 $50 2 $800 $100 3 $-800 $150 Please show inputs from the BAII Plus Financial calculator of how to get these answers
NOTE: Provide a format and show your work (example: N = 6, PV = XXX, I = X%, etc.) 1. As the project manager at Jelz, Inc., you are considering a project that will cost $4,276 and produce cash flows of $1,050 in year 1, $1,250 in year 2, $1,250 in year 3, and $1,550 in year 4. Find the rate of return for the project and determine if you should take the project if your required rate of return is 7.15%. (This is a 2 part question, make sure you answer both parts. Numerical answers should be rounded to 2 decimal places.) 2. You are looking to buy a car. You can afford $550 in monthly payments for five years. In addition to the loan, you can make a $6,000 down payment. If interest rates are 7.25 percent APR, what price of car can you afford (loan plus down payment)? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
a) Calculate the payback period for each project. The maximum allowable payback period setby the company for all projects is 3 years.b) Calculate the net present value (NPV) for each projectNote: No need excel formula .
Consider two projects: A) with cashlows in years 0-4 of -300$, 120$, 120$, 120$ and respectively 120$, B) with casháows in years 0-3 of -300$, 150$, 150$ and respectively 150$ 5 What is the payback period of each project?(a) Is the project with the shortest payback period also the one with the highest NPV? Explain. 6 What are the internal rates of return on the two projects?(a) Does the IRR rule in this case give the same advice i.e. preferred outcome as NPV?