Suppose Extensive Enterprises’s CFO is evaluating a project with the following cash inflows. She does not know the project’s initial cost; however, she does know that the project’s regular payback period is 2.5 years. Year Cash Flow Year 1 $275,000 Year 2 $450,000 Year 3 $475,000 Year 4 $400,000 If the project’s weighted average cost of capital (WACC) is 9%, what is its NPV? $350,578 $334,642 $318,707 $382,448 Which of the following statements indicate a disadvantage of using the discounted payback period for capital budgeting decisions? Check all that apply. The discounted payback period does not take the time value of money into account. The discounted payback period is calculated using net income instead of cash flows. The discounted payback period does not take the project’s entire life into account.
Suppose Extensive Enterprises’s CFO is evaluating a project with the following cash inflows. She does not know the project’s initial cost; however, she does know that the project’s regular payback period is 2.5 years. Year Cash Flow Year 1 $275,000 Year 2 $450,000 Year 3 $475,000 Year 4 $400,000 If the project’s weighted average cost of capital (WACC) is 9%, what is its NPV? $350,578 $334,642 $318,707 $382,448 Which of the following statements indicate a disadvantage of using the discounted payback period for capital budgeting decisions? Check all that apply. The discounted payback period does not take the time value of money into account. The discounted payback period is calculated using net income instead of cash flows. The discounted payback period does not take the project’s entire life into account.
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter26: Capital Investment Analysis
Section: Chapter Questions
Problem 2CMA: Staten Corporation is considering two mutually exclusive projects. Both require an initial outlay of...
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Suppose Extensive Enterprises’s CFO is evaluating a project with the following cash inflows. She does not know the project’s initial cost; however, she does know that the project’s regular payback period is 2.5 years.
|
Year
|
Cash Flow
|
|---|---|
| Year 1 | $275,000 |
| Year 2 | $450,000 |
| Year 3 | $475,000 |
| Year 4 | $400,000 |
If the project’s weighted average cost of capital (WACC) is 9%, what is its NPV?
$350,578
$334,642
$318,707
$382,448
Which of the following statements indicate a disadvantage of using the discounted payback period for capital budgeting decisions? Check all that apply.
The discounted payback period does not take the time value of money into account.
The discounted payback period is calculated using net income instead of cash flows.
The discounted payback period does not take the project’s entire life into account.
Please don't use excel in explanation
Thank you!
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