Question
In: Finance
6. Jack Inc. has a cost of capital of 7.5% and adopts a payback threshold of...
6. Jack Inc. has a cost of capital of 7.5% and adopts a payback threshold of 2.2 years. The company is currently considering five projects. The following table reports yearly cash flows for each project. (21 points)
|
Project A |
Project B |
Project C |
Project D |
Project E |
|
|
Time 0 |
-$14,000 |
-$15,000 |
-$18,000 |
-$20,000 |
-$21,000 |
|
Time 1 |
$6,000 |
$7,000 |
$12,000 |
$12,000 |
$12,000 |
|
Time 2 |
$6,000 |
$7,000 |
$4,000 |
$7,000 |
$12,000 |
|
Time 3 |
$6,000 |
$7,000 |
$4,000 |
$7,000 |
0 |
|
Time 4 |
$6,000 |
$7,000 |
$4,000 |
$7,000 |
0 |
|
Time 5 |
$6,000 |
$7,000 |
$4,000 |
$7,000 |
0 |
a. Calculate the payback period for each project. Using the payback period rule and assuming the projects are independent, what project(s) would you recommend to Jack Inc.? What if the projects are mutually exclusive?
|
Project |
Payback Period |
|
A |
|
|
B |
|
|
C |
|
|
D |
|
|
E |
|
Project Selection |
|
|
Mutually Exclusive Case |
|
|
Independent Case |
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Compute the discounted payback statistic for Project C if the appropriate cost of capital is 6...
Compute the discounted payback statistic for Project C if the
appropriate cost of capital is 6 percent and the maximum allowable
discounted payback period is three years. (Do not round
intermediate calculations. Round your final answer to 2 decimal
places.) Project C Time: 0 1 2 3 4 5 Cash flow –$2,900 $1,240
$1,050 $1,090 $680 $480 Discounted payback period years Should the
project be accepted or rejected? Rejected Accepted
Miller Co. has a weighted average cost of capital of 7.5%. It's cost of equity is...
Miller Co. has a weighted average cost of capital of 7.5%. It's
cost of equity is 10% and the average yield to maturity on its
bonds is 5%. If the tax rate is 35%, what is Miller's market value
debt-equity (D/E) ratio? [Choose closest]
A. 0.370
B. 1.00
C. 0.588
D. 1.70
“Austin Jack Inc.” is considering the following machines Machine A Cost $500,000 Expected Life 6 years...
“Austin Jack Inc.” is considering the following machines
Machine A
Cost $500,000
Expected Life 6 years
CF/Year $220,000
Machine B
Cost $260,000
Expected Life 3 years
CF/Year $200,000
Assume that the cost of capital is 12 percent.
15. What is the NPV for project A? *
A. $380,605
B. $404,510
C. $905,215
D. $510,000 E. None of the above
16. What is the NPV for project B? *
A. $220,366 B. $480,366
C. $740,366
D. $350,366
E. None of the...
Its cost of capital is 10 percent. What is the project’s payback period?
A project has the following cash flows:
Project
Year Cash Flow
0 -$3,000
1 1,000
2 1,000
3 1,357.51
4 1,000
Its cost of capital is 10 percent. What is the project’s payback period?
Compute the payback statistic for Project A if the appropriate cost of capital is 8 percent...
Compute the payback statistic for Project A if the appropriate
cost of capital is 8 percent and the maximum allowable payback
period is four years. (Round your answer to 2 decimal
places.)
Project A
Time:
0
1
2
3
4
5
Cash flow:
–$1,600
$590
$660
$640
$420
$220
Should the project be accepted or rejected?
Compute the discounted payback statistic for Project C if the appropriate cost of capital is 8...
Compute the discounted payback statistic for Project C if the
appropriate cost of capital is 8 percent and the maximum allowable
discounted payback period is three years.
Time:
0
1
2
3
4
5
Cash flow:
–$1,000
$480
$480
$520
$300
$100
Calculate discounted payback period in years
Compute the discounted payback statistic for Project C if the appropriate cost of capital is 8...
Compute the discounted payback statistic for Project C if the
appropriate cost of capital is 8 percent and the maximum allowable
discounted payback period is three years.
(Do not round intermediate calculations
and round your final answer to 2 decimal places.)
Project C
Time:
0
1
2
3
4
5
Cash flow:
–$2,200
$960
$840
$880
$540
$340
Should the project be accepted or rejected?
accepted
rejected
Compute the discounted payback statistic for Project C if the appropriate cost of capital is 8...
Compute the discounted payback statistic for Project C if the
appropriate cost of capital is 8 percent and the maximum allowable
discounted payback period is three years. (Do not round
intermediate calculations and round your final answer to 2 decimal
places.) Project C Time: 0 1 2 3 4 5 Cash flow: –$1,600 $720 $660
$700 $420 $220
Using a 7% annual cost of capital, what is the discounted payback period in years of...
Using a 7% annual cost of capital, what is the discounted
payback period in years of the potential project below? round to 2
decimals
Year-----Cash Flows
0..............-5000
1...............1625
2..............1668
3..............1616
4..............1679
5..............1619
can you please let me know how you find this? especially if
using a financial calculator. Thanks!
Compute the discounted payback statistic for Project D if the appropriate cost of capital is 12...
Compute the discounted payback statistic for Project D if the
appropriate cost of capital is 12 percent and the maximum allowable
discounted payback is four years. (Do not round
intermediate calculations and round your final answer to 2 decimal
places. If the project does not pay back, then enter a "0"
(zero).)
Project D
Time:
0
1
2
3
4
5
Cash flow:
–$12,400
$3,490
$4,460
$1,800
$0
$1,280
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