Business

FinanceQ&A Library42. Calculating Payback An investment project provides cash inflows of $865per year for eight years. What is the project payback period if the initial costis $3,100? What if the initial cost is $4,300? What if it is $7.900?3. Calculating Payback Stenson, Inc., imposes a payback cutoff of three yearsfor its international investment projects. If the company has the followingLO 1LO 1two projects available, should it accept either of them?Cash Flow (B)Cash Flow (A)Year-$125,000-$75,00029,00033,000132,00036,00035,00019,0003240,0009,0004. Calculating AAR You're trying to determine whether or not to expand yourbusiness by building a new manufacturing plant. The plant has an installationcost of $10.8 million, which will be depreciated straight-line to zero overits four-year life. If the plant has projected net income of $1,293,000,$1,725,000, $1,548,000, and $1,310,000 over these four years, what is theproject's average accounting return (AAR)?LO 25. Calculating IRR A firm evaluates all of its projects by applying the IRR rule.If the required return is 11 percent, should the firm accept the following project?LO 3YearCash Flow-$157,300174,000287,000346,0006. Calculating NPV For the cash flows in the previous problem, suppose thefirm uses the NPV decision rule. At a required return of 9 percent, shouldthe firm accept this project? What if the required return was 21 percent?LO 4Question

Asked Nov 7, 2019

129 views

Number 5 and 6

Step 1

5) The IRR is the rate where NPV equals to zero.

Using the goal seek method, IRR is identified as ** 16.26%**, which is greater than the required return of 11%, thus the project must be

Step 2

6. At a return of 9%, NPV is as follows:

The net present value is **positive**, thus the project mus...

Tagged in

Find answers to questions asked by student like you

Show more Q&A

Q: Round Hammer is comparing two different capital structures: An all-equity plan (Plan I) and a levere...

A: a) Calculation of EPS:Thus, the EPS for Plan I and Plan II are $3.38 and $2.90 respectively.

Q: Consider a project with the following information: Initial fixed asset investment = $515,000; straig...

A: Actual Quantity Sold = 102,000 units Assumption:Quantity sold changes to 101,000 units. Calculation ...

Q: What are the three primary methods used to determine interest charges on an unpaid credit balance? ...

A: The three primary methods used to determine interest charges on an unpaid credit balance is,Average ...

Q: Executives at XYZ Corporation realize that they have too much liquid assets. They want to use this c...

A: Calculation of Expected rate of Return and Standard Deviation of the each company using Excel: Expec...

Q: I am currently working on some practice problems for finance and need help setting them up as well a...

A: Hi, As per Q&A guidelines, we should answer the first question when multiple questions posted in...

Q: You own a furniture manufacturing company. You are looking to expand into glass furniture and need t...

A: Calculation of ARR:The ARR for Machine 1 is 28.89% and Machine 2 is 32.73%.Excel Spreadsheet:

Q: wilson's has 10,000 shares of common stock outstanding at a market price of $35 a share. the firm al...

A: Computation of the weighted average cost of capital:Hence, the weighted average cost of capital is 8...

Q: Use a calculator for this exercise.Arrowood's Camera Store advertises a Canon Power Shot 3.34-megapi...

A: Formula to compute the monthly payment:

Q: Down Under Boomerang, Inc., is considering a new 3-year expansion project that requires an initial f...

A: The initial investment cost of store is $2,300,000.According to straight line depreciation, the annu...