Question
In: Finance
Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been...
Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 10%.
| 0 | 1 | 2 | 3 | 4 | |
| Project A | -1,050 | 600 | 390 | 210 | 260 |
| Project B | -1,050 | 200 | 325 | 360 | 710 |
What is Project A's payback? Round your answer to four decimal places. Do not round your intermediate calculations.
What is Project A's discounted payback? Round your answer to four decimal places. Do not round your intermediate calculations.
What is Project B's payback? Round your answer to four decimal places. Do not round your intermediate calculations.
What is Project B's discounted payback? Round your answer to four decimal places. Do not round your intermediate calculations.
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been...
Bellinger Industries is considering two projects for inclusion
in its capital budget, and you have been asked to do the analysis.
Both projects' after-tax cash flows are shown on the time line
below. Depreciation, salvage values, net operating working capital
requirements, and tax effects are all included in these cash flows.
Both projects have 4-year lives, and they have risk characteristics
similar to the firm's average project. Bellinger's WACC is 7%.
Years
0
1
2
3
4
Project A
-1100...
Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been...
Bellinger Industries is considering two projects for inclusion
in its capital budget, and you have been asked to do the analysis.
Both projects' after-tax cash flows are shown on the time line
below. Depreciation, salvage values, net operating working capital
requirements, and tax effects are all included in these cash flows.
Both projects have 4-year lives, and they have risk characteristics
similar to the firm's average project. Bellinger's WACC is 11%.
0
1
2
3
4
Project A
-1,250
730...
Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been...
Bellinger Industries is considering two projects for inclusion
in its capital budget, and you have been asked to do the analysis.
Both projects' after-tax cash flows are shown on the time line
below. Depreciation, salvage values, net operating working capital
requirements, and tax effects are all included in these cash flows.
Both projects have 4-year lives, and they have risk characteristics
similar to the firm's average project. Bellinger's WACC is 11%.
0
1
2
3
4
Project A
-1,050
600...
Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been...
Bellinger Industries is considering two projects for inclusion
in its capital budget, and you have been asked to do the analysis.
Both projects' after-tax cash flows are shown on the time line
below. Depreciation, salvage values, net operating working capital
requirements, and tax effects are all included in these cash flows.
Both projects have 4-year lives, and they have risk characteristics
similar to the firm's average project. Bellinger's WACC is 10%.
0
1
2
3
4
Project A
-900
700...
Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been...
Bellinger Industries is considering two projects for inclusion
in its capital budget, and you have been asked to do the analysis.
Both projects' after-tax cash flows are shown on the time line
below. Depreciation, salvage values, net operating working capital
requirements, and tax effects are all included in these cash flows.
Both projects have 4-year lives, and they have risk characteristics
similar to the firm's average project. Bellinger's WACC is 9%.
0
1
2
3
4
Project A
-950
650...
Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been...
Bellinger Industries is considering two projects for inclusion
in its capital budget, and you have been asked to do the analysis.
Both projects' after-tax cash flows are shown on the time line
below. Depreciation, salvage values, net operating working capital
requirements, and tax effects are all included in these cash flows.
Both projects have 4-year lives, and they have risk characteristics
similar to the firm's average project. Bellinger's WACC is 10%.
0
1
2
3
4
Project A
-1,140
640...
Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been...
Bellinger Industries is considering two projects for inclusion
in its capital budget, and you have been asked to do the analysis.
Both projects' after-tax cash flows are shown on the time line
below. Depreciation, salvage values, net operating working capital
requirements, and tax effects are all included in these cash flows.
Both projects have 4-year lives, and they have risk characteristics
similar to the firm's average project. Bellinger's WACC is 8%.
0
1
2
3
4
Project A
-1,160
680...
Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been...
Bellinger Industries is considering two projects for inclusion
in its capital budget, and you have been asked to do the analysis.
Both projects' after-tax cash flows are shown on the time line
below. Depreciation, salvage values, net operating working capital
requirements, and tax effects are all included in these cash flows.
Both projects have 4-year lives, and they have risk characteristics
similar to the firm's average project. Bellinger's WACC is 12%.
Year
A
B
0
(1000.00)
(1000.00)
1
700.00
300.00...
Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been...
Bellinger Industries is considering two projects for inclusion
in its capital budget, and you have been asked to do the analysis.
Both projects' after-tax cash flows are shown on the time line
below. Depreciation, salvage values, net operating working capital
requirements, and tax effects are all included in these cash flows.
Both projects have 4-year lives, and they have risk characteristics
similar to the firm's average project. Bellinger's WACC is 9%.
0
1
2
3
4
Proj
A
-1,190
650...
Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been...
Bellinger Industries is considering two projects for inclusion
in its capital budget, and you have been asked to do the analysis.
Both projects' after-tax cash flows are shown on the time line
below. Depreciation, salvage values, net operating working capital
requirements, and tax effects are all included in these cash flows.
Both projects have 4-year lives, and they have risk characteristics
similar to the firm's average project. Bellinger's WACC is 12%.
0
1
2
3
4
Project A
-1,150
650...
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