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FCB Industries is evaluating two projects based on the discounted payback method. The company’s cost of capital is 12%. Project A is deemed to be of average risk, but Project B has a very high risk profile. The company has decided to adjust the discount rate by 2% for Project B. The investments and operating cash flows follow:     Project A Project B Investment ($5,000) ($6,000) Cash flows     1 $2,500 $3,000 2 $2,000 $2,250 3 $1,500 $1,750 4 $1,000 $1,500     Calculate the discounted payback period for Project B Group of answer choices 3.51 years 3.30 years 3.10 years 3.48 years 3.69 years 2.43 years 3.15 years 3.81 years

FCB Industries is evaluating two projects based on the discounted payback method. The company’s cost of capital is 12%. Project A is deemed to be of average risk, but Project B has a very high risk profile. The company has decided to adjust the discount rate by 2% for Project B. The investments and operating cash flows follow:     Project A Project B Investment ($5,000) ($6,000) Cash flows     1 $2,500 $3,000 2 $2,000 $2,250 3 $1,500 $1,750 4 $1,000 $1,500     Calculate the discounted payback period for Project B Group of answer choices 3.51 years 3.30 years 3.10 years 3.48 years 3.69 years 2.43 years 3.15 years 3.81 years

EBK CFIN
EBK CFIN
6th Edition
ISBN:9781337671743
Author:BESLEY
Publisher:BESLEY
Chapter11: The Cost Of Capital
Section: Chapter Questions
Problem 19PROB
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FCB Industries is evaluating two projects based on the discounted payback method. The company’s cost of capital is 12%. Project A is deemed to be of average risk, but Project B has a very high risk profile. The company has decided to adjust the discount rate by 2% for Project B. The investments and operating cash flows follow:

 

 

Project A

Project B

Investment

($5,000)

($6,000)

Cash flows

 

 

1

$2,500

$3,000

2

$2,000

$2,250

3

$1,500

$1,750

4

$1,000

$1,500

 

 

Calculate the discounted payback period for Project B

Group of answer choices
3.51 years
3.30 years
3.10 years
3.48 years
3.69 years
2.43 years
3.15 years
3.81 years
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