a. Project A costs $7,000 and will generate annual after-tax net cash inflows of $2,850 for 5 years. What is the payback period for this investment under the assumption that the cash inflows occur evenly throughout the year? (Round your answer to 2 decimal places.) . Project B costs $7,000 and will generate after-tax cash inflows of $950 in year 1, $1,850 in year 2, $2,900 in year 3, $2,850 in year 4, and $2,900 in year 5. What is the payback period (in years) for this investment assuming that the cash inflows occur evenly hroughout the year? (Round your answer to 2 decimal places.) c. Project C costs $7,000 and will generate net cash inflows of $3,250 before taxes for 5 years. The firm uses straight-line depreciation with no salvage value and is subject to a 30% tax rate. What is the payback period under the assumption that all cash inflows occur evenly throughout the year? (Round your answer to 2 decimal places.) 1. Project D costs $7,000 and will generate sales of $4,700 each year for 5 years. The cash expenditures will be $1,850 per year. The rm uses straight-line depreciation with an estimated salvage value of $400 and has a tax rate of 30%. What is the accounting (book) rate of return based on the original investment? (Round your answer to 2 decimal places.) 2) What is the book rate of return based on the average book value? (Round your answer to 2 decimal places.) se the built-in NPV function in Excel to calculate the amounts for projects a through d. (Round your answers to the nearest whole ollar amount.) What is the NPV of project A? Assume that the firm requires a minimum after-tax return of 6% on investment. 2. What is the NPV of project B? Assume that the firm requires a minimum after-tax return of 6% on investment. What is the NPV of project C? Assume that the firm requires a minimum after-tax return of 6% on investment. - What is the NPV of project D? Assume that the firm requires a minimum after tax return of 6% on investment.
a. Project A costs $7,000 and will generate annual after-tax net cash inflows of $2,850 for 5 years. What is the payback period for this investment under the assumption that the cash inflows occur evenly throughout the year? (Round your answer to 2 decimal places.) . Project B costs $7,000 and will generate after-tax cash inflows of $950 in year 1, $1,850 in year 2, $2,900 in year 3, $2,850 in year 4, and $2,900 in year 5. What is the payback period (in years) for this investment assuming that the cash inflows occur evenly hroughout the year? (Round your answer to 2 decimal places.) c. Project C costs $7,000 and will generate net cash inflows of $3,250 before taxes for 5 years. The firm uses straight-line depreciation with no salvage value and is subject to a 30% tax rate. What is the payback period under the assumption that all cash inflows occur evenly throughout the year? (Round your answer to 2 decimal places.) 1. Project D costs $7,000 and will generate sales of $4,700 each year for 5 years. The cash expenditures will be $1,850 per year. The rm uses straight-line depreciation with an estimated salvage value of $400 and has a tax rate of 30%. What is the accounting (book) rate of return based on the original investment? (Round your answer to 2 decimal places.) 2) What is the book rate of return based on the average book value? (Round your answer to 2 decimal places.) se the built-in NPV function in Excel to calculate the amounts for projects a through d. (Round your answers to the nearest whole ollar amount.) What is the NPV of project A? Assume that the firm requires a minimum after-tax return of 6% on investment. 2. What is the NPV of project B? Assume that the firm requires a minimum after-tax return of 6% on investment. What is the NPV of project C? Assume that the firm requires a minimum after-tax return of 6% on investment. - What is the NPV of project D? Assume that the firm requires a minimum after tax return of 6% on investment.
Fundamentals of Financial Management (MindTap Course List)
15th Edition
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter12: Cash Flow Estimation And Risk Analysis
Section: Chapter Questions
Problem 16P: REPLACEMENT CHAIN The Lesseig Company has an opportunity to invest in one of two mutually exclusive...
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Answer each independent question, (a) through (e), below.
a. Project A costs $7,000 and will generate annual after-tax net cash inflows of $2,850 for 5 years. What is the payback period for this
investment under the assumption that the cash inflows occur evenly throughout the year? (Round your answer to 2 decimal places.)
b. Project B costs $7,000 and will generate after-tax cash inflows of $950 in year 1, $1,850 in year 2, $2,900 in year 3, $2,850 in year
4, and $2,900 in year 5. What is the payback period (in years) for this investment assuming that the cash inflows occur evenly
throughout the year? (Round your answer to 2 decimal places.)
c. Project C costs $7,000 and will generate net cash inflows of $3,250 before taxes for 5 years. The firm uses straight-line depreciation
with no salvage value and is subject to a 30% tax rate. What is the payback period under the assumption that all cash inflows occur
evenly throughout the year? (Round your answer to 2 decimal places.)
d. Project D costs $7,000 and will generate sales of $4,700 each year for 5 years. The cash expenditures will be $1,850 per year. The
firm uses straight-line depreciation with an estimated salvage value of $400 and has a tax rate of 30%.
(1) What is the accounting (book) rate of return based on the original investment? (Round your answer to 2 decimal places.)
(2) What is the book rate of return based on the average book value? (Round your answer to 2 decimal places.)
O
Use the built-in NPV function in Excel to calculate the amounts for projects a through d. (Round your answers to the nearest whole
dollar amount.)
e1. What is the NPV of project A? Assume that the firm requires a minimum after-tax return of 6% on investment.
e2. What is the NPV of project B? Assume that the firm requires a minimum after-tax return of 6% on investment.
e3. What is the NPV of project C? Assume that the firm requires a minimum after-tax return of 6% on investment.
e4. What is the NPV of project D? Assume that the firm requires a minimum after-tax return of 6% on investment.
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