Question
In: Finance
Britney Javelin Company is considering two investments, both of which cost $24,000. The cash flows are...
Britney Javelin Company is considering two investments, both of which cost $24,000. The cash flows are as follows: Use Appendix B and Appendix D.
| Year | Project M | Project N | ||||
| 1 | $9,000 | $8,000 | ||||
| 2 | 10,000 | 9,000 | ||||
| 3 | 10,000 | 15,000 | ||||
a. Calculate the payback period for project M and project N. (Round the final answers to 2 decimal places.)
| Payback period | |||
| Project M | years | ||
| Project N | years | ||
b-1. Calculate the NPV for project M and project N. Assume a cost of capital of 8 percent. (Round "PV Factor" to 3 decimal places. Round the intermediate and final answers to the nearest whole dollar.)
| Net present value | |
| Project M | $ |
| Project N | $ |
b-2. Which of the two projects should be chosen based on the NPV method?
-
Project M
-
Project N
-
Both
c. Should a firm normally have more confidence in answer derived based on NPV method or Payback method?
-
NPV method
-
Pay back method
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Britney Javelin Company is considering two investments, both of which cost $22,000. The cash flows are...
Britney Javelin Company is considering two investments, both of
which cost $22,000. The cash flows are as follows: Use Appendix B
and Appendix D.
Year
Project M
Project N
1
$8,000
$7,000
2
12,000
11,500
3
8,000
13,000
a. Calculate the payback period for project M
and project N. (Round the final answers to 2 decimal
places.)
Payback period
Project M
years
Project N
years
b-1. Calculate the NPV for project M and
project N. Assume a cost...
Britney Javelin Company is considering two investments, both of which cost $18,000. The cash flows are...
Britney Javelin Company is considering two investments, both of
which cost $18,000. The cash flows are as follows: Use Appendix B
and Appendix D. Year Project M Project N 1 $7,000 $6,000 2 8,000
7,000 3 7,000 12,000 a. Calculate the payback period for project M
and project N. (Round the final answers to 2 decimal places.)
Payback period Project M years Project N years b-1. Calculate the
NPV for project M and project N. Assume a cost of capital...
Britney Javelin Company is considering two investments, both of which cost $46,000. The cash flows are...
Britney Javelin Company is considering two investments, both of
which cost $46,000. The cash flows are as follows: Use Appendix B
and Appendix D.
Year
Project M
Project N
1
$24,000
$19,000
2
19,000
23,000
3
16,000
20,000
a. Calculate the payback period for project M
and project N. (Round the final answers to 2 decimal
places.)
Payback period
Project M
? years
Project N
? years
b-1. Calculate the NPV for project M and
project N. Assume...
X-treme Vitamin Company is considering two investments, both of which cost $48,000. The cash flows are...
X-treme Vitamin Company is considering two investments, both of
which cost $48,000. The cash flows are as follows:
Year
Project A
Project B
1
$
52,000
$
48,000
2
21,000
25,000
3
20,000
26,000
Use Appendix B for an approximate answer but calculate your
final answer using the formula and financial calculator
methods.
a-1. Calculate the payback period for Project A
and Project B. (Round your answers to 2 decimal
places.)
a-2. Which of the two projects should be...
X-treme Vitamin Company is considering two investments, both of which cost $20,000. The cash flows are...
X-treme Vitamin Company is considering two investments, both of
which cost $20,000. The cash flows are as follows:
Year
Project A
Project B
1
$
23,000
$
20,000
2
10,000
9,000
3
10,000
15,000
Use Appendix B for an approximate answer but calculate your
final answer using the formula and financial calculator
methods.
a-1. Calculate the payback period for Project A
and Project B. (Round your answers to 2 decimal
places.)
a-2. Which of the two projects should be...
X-treme Vitamin Company is considering two investments, both of which cost $12,000. The cash flows are...
X-treme Vitamin Company is considering two investments, both of
which cost $12,000. The cash flows are as follows:
Year
Project A
Project B
1
$
13,000
$
12,000
2
5,000
4,000
3
6,000
11,000
a-1. Calculate the payback period for Project A
and Project B. (Round your answers to 2 decimal
places.)
b-1. Calculate the net present value for
Project A and Project B. Assume a cost of capital of 8 percent.
(Do not round intermediate calculations and round...
X-treme Vitamin Company is considering two investments, both of which cost $11,000. The cash flows are...
X-treme Vitamin Company is considering two investments, both of
which cost $11,000. The cash flows are as follows: Year Project A
Project B 1 $ 15,000 $ 11,000 2 6,000 6,000 3 5,000 10,000 Use
Appendix B for an approximate answer but calculate your final
answer using the formula and financial calculator methods. a-1.
Calculate the payback period for Project A and Project B. (Round
your answers to 2 decimal places.) a-2. Which of the two projects
should be chosen...
X-treme Vitamin Company is considering two investments, both of which cost $12,000. The cash flows are...
X-treme Vitamin Company is considering two investments, both of
which cost $12,000. The cash flows are as follows:
Year
Project A
Project B
1
$
13,000
$
12,000
2
5,000
4,000
3
6,000
11,000
Use Appendix B for an approximate answer but calculate your
final answer using the formula and financial calculator
methods.
a-1. Calculate the payback period for Project A
and Project B. (Round your answers to 2 decimal
places.)
Payback Period
Project A
year(s)
Project B
year(s)...
Grand Vitamin Company is considering two investments, each of which costs $15,000. The cash flows are...
Grand Vitamin Company is considering two investments, each of
which costs $15,000. The cash flows are below.
Compute the payback period for
each.
Year
Project A
Project B
1
$22,000
$7,500
2
18,000
7,500
3
16,000
8,000
2. Which of the two projects in Problem 2 should be chosen based
on the net present value method? Assume a cost of capital of 10
percent. To earn credit, show both of your NPV
answers.
3. The Tom Corp wants to know its...
A. X-treme Vitamin Company is considering two investments, both of which cost $20,000. The firm’s cost...
A. X-treme Vitamin Company is considering two investments, both
of which cost $20,000. The firm’s cost of capital is 15 percent.
The cash flows are as follows:
Year
Project A
Project B
1
12000
10000
2
8000
6000
3
6000
16000
(a) What is the payback period for each project? Which project
would you accept based on the payback period?
(b) What is the discounted payback for each project? Which project
would you accept based on the discounted payback criterion?...
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