Question
In: Finance
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 |
|
|
2 |
350350 |
2,500 |
1,200 |
|
|
3 |
190 |
2,500 |
3,000 |
|
|
4 |
8080 |
2,500 |
3,000 |
|
|
5 |
490 |
2,500 |
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 10.3 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 1 year agoRelated Solutions
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
...
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...
(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...
(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)...
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As of the end of business on October 31, the following accounts
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