Question
In: Finance
Stenson, Inc., imposes a payback cutoff of three years for its international investment projects. Assume the...
| Stenson, Inc., imposes a payback cutoff of three years for its international investment projects. Assume the company has the following two projects available. |
| Year | Cash Flow A | Cash Flow B | ||
| 0 | –$ | 47,000 | –$ | 92,000 |
| 1 | 18,000 | 20,000 | ||
| 2 | 24,200 | 25,000 | ||
| 3 | 20,000 | 34,000 | ||
| 4 | 6,000 | 248,000 | ||
|
What is the payback period for each project (A and B in years)? |
Solutions
jeff jeffy answered 7 months agoRelated Solutions
Global Toys, Inc., imposes a payback cutoff of three years for its international investment projects. Assume...
Global Toys, Inc., imposes a payback cutoff of three years for
its international investment projects. Assume the company has the
following two projects available.
Year
Cash Flow A
Cash Flow B
0
–$
64,000
–$
109,000
1
26,500
28,500
2
34,400
33,500
3
28,500
25,500
4
14,500
231,000
Requirement 1:
What is the payback period for each project?
(Do not round intermediate
calculations. Round your answers to 2 decimal
places (e.g., 32.16).)
Payback period
Project A
years
Project B...
Bronco, Inc., imposes a payback cutoff of three years for its international investment projects. Year...
Bronco, Inc., imposes a payback cutoff of three years for its
international investment projects.
Year
Cash Flow (A)
Cash Flow (B)
0
–$
54,000
–$
64,000
1
20,000
12,000
2
22,000
15,000
3
18,000
20,000
4
5,000
224,000
What is the payback period for both projects? (Round
your answers to 2 decimal places, e.g., 32.16.)
Buy Coastal, Inc., imposes a payback cutoff of 3 years for its international investment projects. Suppose...
Buy Coastal, Inc., imposes a payback cutoff of 3 years for its
international investment projects. Suppose the company has the
following two projects available. Project A has payback period of
years, while project B has a payback period of years. Therefore, it
should project A and project B. (Round your answers to 3 decimal
places. (e.g., 32.162))
Year Cash Flow (A) Cash Flow (B)
0 −$43,000 −$59,000
1 21,000 10,000
2 31,000 16,000
3 10,000 26,000
4 2,000 268,000 References
An investment under consideration has a payback of eight years and a cost of $868,000. Assume...
An investment under consideration has a payback of eight years
and a cost of $868,000. Assume the cash flows are conventional.
If the required return is 10 percent, what is the worst-case
NPV?
Find out the NPV, IRR and Payback period for each of the following three projects. Assume...
Find out the NPV, IRR and Payback period for each of the
following three projects.
Assume I=6%.
(60 points)
Project
CF0
CF1
CF2
CF3
CF4
CF5
A
-12,000
3000
3000
4000
4000
1000
B
-12,000
4000
4000
3000
3000
1000
C
-12,000
3000
3000
3000
3000
1000
D
-12,000
5000
3000
5000
3000
0
E
-12,000
3000
3000
3000
3000
5000
F
-12,000
0
0
6000
6000
6000
Find out the NPV, IRR and Payback period for each of the following three projects. Assume...
Find out the NPV, IRR and Payback period for each of the
following three projects.
Assume I=6%. Please show work and
write out answers. Do not put into a table. Thank you
Project
CF0
CF1
CF2
CF3
CF4
CF5
A
-12,000
3000
3000
4000
4000
1000
B
-12,000
4000
4000
3000
3000
1000
C
-12,000
3000
3000
3000
3000
1000
D
-12,000
5000
3000
5000
3000
0
E
-12,000
3000
3000
3000
3000
5000
F
-12,000
0
0
6000...
If an investment proposal is accepted for implementation and its payback period period is 3 years...
If an investment proposal is accepted for implementation and its
payback period period is 3 years out of 5, is it virtually certain
that the project will have to support for the first few years with
capital from sources other than the cash generated from the
projects. what are the implications of this multiyear cash
requirement for the management. Will the implications be same if a
new company with no other projects in line is evaluating the same
project.
Pharoah Manufacturing Co. is evaluating two projects. The company uses payback criteria of three years or...
Pharoah Manufacturing Co. is evaluating two projects. The
company uses payback criteria of three years or less. Project A has
a cost of $901,000, and project B’s cost is $1,268,100. Cash flows
from both projects are given in the following table. Year Project A
Project B 1 $86,212 $586,212 2 313,562 413,277 3 427,594 231,199 4
285,552 What are their discounted payback periods? (Round answers
to 2 decimal places, e.g. 15.25. If discounted payback period
exceeds life of the project,...
Evaluate the following projects using the payback method assuming a rule of 4 years for payback....
Evaluate the following projects using the payback method
assuming a rule of 4 years for payback.
Year Project A Project B
0. -10,000 -10,000
1. 4000 4000
2. 4000 3000
3. 4000 2000
4. 0. 1,000,000
A.
Project A can be accepted because the payback period is 2.5
years but Project B cannot be accepted because its payback period
is longer than 3 years.
B.
Project B should be accepted, since there is a $1,000,000 payoff
in the 4th year...
Evaluate the following projects using the payback method assuming a rule of 3 years for payback....
Evaluate the following projects using the payback method
assuming a rule of 3 years for payback.
Year
Project A
Project B
0
-10,000
-10,000
1
4,000
4,000
2
4,000
3,000
3
4,000
2,000
4
0
1,000,000
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