Question 1. A project manager is working on justification of a project. Since very little information is known about the project, some rough estimates have been gathered. Following table is prepared to show the cash inflow and outflow for the following years: Year Cash In Flow ($) Cash Out Flow ($) 006 200 300 2 400 200 3 500 300 4 500 200 900 300 a) What is the payback period for this project? b) lf the required rate of return is 20%, is the project mentioned above acceptable? Use NPV. c). Calculate profitability index to determine if the project acceptable. Use 20% interest rate.

Question 1. A project manager is working on justification of a project. Since very little information is known about the project, some rough estimates have been gathered. Following table is prepared to show the cash inflow and outflow for the following years: Year Cash In Flow ($) Cash Out Flow ($) 006 200 300 2 400 200 3 500 300 4 500 200 900 300 a) What is the payback period for this project? b) lf the required rate of return is 20%, is the project mentioned above acceptable? Use NPV. c). Calculate profitability index to determine if the project acceptable. Use 20% interest rate.

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter26: Capital Investment Analysis

Section: Chapter Questions

Problem 2MAD: Assume San Lucas Corporation in MAD 26-1 assigns the following probabilities to the estimated annual...

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