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(Payback and discounted payback period calculations) The Bar-None Manufacturing Co. manufactures fence panels used in cattle...
(Payback and discounted payback period calculations) The Bar-None Manufacturing Co. manufactures fence panels used in cattle feed lots throughout the Midwest. Bar-None's management is considering three investment projects for next year but doesn't want to make any investment that requires more than three years to recover the firm's initial investment. The cash flows for the three projects (Project A, ProjectB, and Project C) are as follows:
| Year | Project A | Project B | Project C |
|---|---|---|---|
| 0 | $(950) | $(9,000) | $(6,500) |
| 1 | 530 | 6,000 | 800 |
| 2 | 250 | 3,500 | 800 |
| 3 | 190 | 3,500 | 3,000 |
| 4 | 90 | 3,500 | 3,000 |
| 5 | 450 | 3,500 | 3,000 |
a.) Given Bar-None's three-year payback period, which of the projects will qualify for acceptance?
b.) Rank the three projects using their payback period. Which project looks the best using this criterion? Do you agree with this ranking? Why or why not?
c.) If Bar-None uses a discount rate of 9.2 percent to analyze projects, what is the discounted payback period for each of the three projects? If the firm still maintains its three-year payback policy for the discounted payback, which projects should the firm undertake?
Solutions
jeff jeffy answered 2 years agoRelated Solutions
(Payback and discounted payback period calculations) The Bar-None Manufacturing Co. manufactures fence panels used in cattle...
(Payback and discounted payback period calculations) The
Bar-None Manufacturing Co. manufactures fence panels used in cattle
feed lots throughout the Midwest. Bar-None's management is
considering three investment projects for next year but doesn't
want to make any investment that requires more than three years to
recover the firm's initial investment.
The cash flows for the three projects (Project A, Project B, and
Project C) are as follows:
a. Given Bar-None's three-year payback period, which of the
projects will qualify for...
(Payback and discounted payback period calculations) The Bar-None Manufacturing Co. manufactures fence panels used in cattle...
(Payback and discounted payback period calculations) The
Bar-None Manufacturing Co. manufactures fence panels used in cattle
feed lots throughout the Midwest. Bar-None's management is
considering three investment projects for next year but doesn't
want to make any investment that requires more than three years to
recover the firm's initial investment. The cash flows for the
three projects (Project A, Project B, and Project C) are as
follows:
Year
Year Project A Project B
Project C
0 $(980) $(9,000)
$(5,500)...
The Bar-None Manufacturing Co. manufactures fence panels used in cattle feed lots throughout the Midwest. ...
The Bar-None Manufacturing Co. manufactures fence panels used
in cattle feed lots throughout the Midwest. Bar-None's management
is considering three investment projects for next year but doesn't
want to make any investment that requires more than three years to
recover the firm's initial investment. The cash flows for the
three projects (Project A, Project B, and Project C) are as
follows:
Year
Project A
Project B
Project C
0
$(1,050)
$(9,800)
$(5,500)
1
650650
5,500
1,200...
The Bar-None Manufacturing Co. manufactures fence panels used in cattle feed lots throughout the Midwest. Bar-None's...
The Bar-None Manufacturing Co. manufactures fence panels used in
cattle feed lots throughout the Midwest. Bar-None's management is
considering three investment projects for next year but doesn't
want to make any investment that requires more than three years to
recover the firm's initial investment. The cash flows for the three
projects (Project A, Project B, and Project C) are as follows:
Year
Project A
Project B
Project C
0
$(950)
$(9,000 )
$(6,000 )
1
530
6,000
1,800
2
350...
1. The Bar-None Manufacturing Co. manufactures fence panels used in cattle feed lots throughout the Midwest....
1. The Bar-None Manufacturing Co. manufactures fence panels
used in cattle feed lots throughout the Midwest. Bar-None's
management is considering three investment projects for next year
but doesn't want to make any investment that requires more than
three years to recover the firm's initial investment. The cash
flows for the three projects (Project A, Project B, and Project
C) are as follows:
0
$(900)
$(9,800)
$(5,500)
1
550
4,000
800
2
225
3,500
800
3
180
3,500
...
(Discounted payback period) The Callaway Cattle Company is considering the construction of a new feed handling...
(Discounted payback period) The Callaway Cattle Company is
considering the construction of a new feed handling system for its
feed lot in Abilene, Kansas. The new system will provide annual
labor savings and reduced waste totaling $190,000 while the initial
investment is only $510,000. Callaway's management has used a
simple payback method for evaluating new investments in the past
but plans to calculate the discounted payback to analyze the
investment. Where the appropriate discount rate for this type of...
Distinguish between the payback period and the discounted payback period?
Distinguish between the payback period and the discounted
payback period?
Determine the discounted payback period of a new manufacturing process that costs $15,000,000 with an annual...
Determine the discounted payback period of a new manufacturing
process that costs $15,000,000 with an annual savings of $3,800,000
going up by 3% per year at a MARR of 10%
Please show all work and steps. Any help will be appreciated and
thank you for your time!
Determine the Payback Period, the Discounted Payback Period, and the Net Present Value for the following...
Determine the Payback Period, the Discounted Payback Period, and
the Net Present Value for the following after-tax cash flow
projections. Also tell me whether the IRR is greater or less then
the RRR.
A. Year ATCF
0 $(60,000)
1 21,000
2 27,000
3 24,000
4 16,000
Assume a 16% required rate of return
Determine the Payback Period, the Discounted Payback Period, and the Net Present Value for the following...
Determine the Payback Period, the Discounted Payback Period, and
the Net Present Value for the following after-tax cash flow
projections. Also tell me whether the IRR is greater or less then
the RRR
B. Year ATCF
0 (100,000)
1 (320,000)
2 130,000
3 185,000
4 200,000
5 195,000
6 150,000
Assume a 20% required rate of return
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