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X-Treme vitamin company is considering two investments,both of which cost$20000.The Firm's cost of capital is 15...
X-Treme vitamin company is considering two investments,both of which cost$20000.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 |
Instructions:
I. What is the payback period for each project? Which project would you accept based on the payback period?
II.What is the discounted payback period for each project? which project would you accept on the discounted payback criterion?
III. Calculate The NPV of each Project? Which project would you choose based on NPV criterion ?
IV.Based on the IRR criteria which project would you choose if they were mutually exclusive?
Solutions
jeff jeffy answered 3 months agoRelated Solutions
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?...
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....
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 $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...
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...
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