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 2 years 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)...
X-treme Vitamin Company is considering two investments, both of which cost $14,000. The cash flows are...
X-treme Vitamin Company is considering two investments, both of
which cost $14,000. The cash flows are as follows:
Year
Project A
Project B
1
$
16,000
$
14,000
2
6,000
5,000
3
4,000
9,000
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)
a-2. Which of the two projects should be chosen
based on the payback method?
Project A
Project B
b-1....
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...
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