Question

In: Finance

Garvin Enterprises is considering a project that has the following cash flow and WACC data. What...

Garvin Enterprises is considering a project that has the following cash flow and WACC data. What is the project's discounted payback? Enter your answer rounded to two decimal places. For example, if your answer is 12.345 then enter as 12.35 in the answer box. WACC: 11% Year: 0 1 2 3 Cash flows: -$1,100 $550 $550 $550

Solutions

Expert Solution

Year 0 1 2 3
Cashflow(in $)         (1,100.00)              550.00                     550.00                 550.00
PVF @11%                 1.000                 0.901                       0.812                   0.731
Discounted Cashflow (Cash flow * PVF)         (1,100.00)              495.50                     446.39                 402.16
Cumulative Cashflow(in $)         (1,100.00)            (604.50)                  (158.11)                 244.04

Discounted Payback Period = A + (B/C)

where

A -  last time period where the cumulative discounted cash flow was negative

B - absolute value of the CCF at the end of that period A

C - value of the DCF in the next period after A

Discounted Payback Period = 2+(158.11/402.16)

= 2.39 years


Related Solutions

Garvin Enterprises is considering a project that has the following cash flow and WACC data. What...
Garvin Enterprises is considering a project that has the following cash flow and WACC data. What is the project's discounted payback? Enter your answer rounded to two decimal places. For example, if your answer is 12.345 then enter as 12.35 in the answer box. WACC: 8% Year: 0 1 2 3 Cash flows: -$1,100 $550 $550 $550
Garvin Enterprises is considering a project that has the following cash flow and WACC data. What...
Garvin Enterprises is considering a project that has the following cash flow and WACC data. What is the project's discounted payback? Enter your answer rounded to two decimal places. For example, if your answer is 12.345 then enter as 12.35 in the answer box. WACC: 12% Year: 0 1 2 3 Cash flows: -$1,100 $550 $550 $550
Cornell Enterprises is considering a project that has the following cash flow and WACC data. What...
Cornell Enterprises is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that a project's projected NPV can be negative, in which case it will be rejected. WACC: 10.00% Year 0 1 2 3 Cash flows -$1,275 $450 $460 $470
Q3.Gamma Enterprises, Inc. is considering a project that has the following cash flow and WACC data....
Q3.Gamma Enterprises, Inc. is considering a project that has the following cash flow and WACC data. What is the project's MIRR? WACC: 13% Year: 0 1 2 3 4 Cash flows: -$1,100 $300 $320 $340 $550 Q4.Hogwarts Inc. is considering a project with the following cash flows:                   Initial cash outlay = $2,500,000            After-tax net operating cash flows for years 1 to 4 = $779,000 per year            Additional after-tax terminal cash flow at the end of year 4 = $600,000 Compute...
You are considering a project that has the following cash flow and WACC data. What is...
You are considering a project that has the following cash flow and WACC data. What is the project’s NPV? WACC: 9.00% Year: 0 1 2 3 4 5 Cash flows: –$1,000 $300 $300 $300 $300 $300 Select one: a. 150.62 b. 176.4 c. 166.90 d. 143.90
Rocket Inc. is considering a project that has the following cash flow and WACC data. WACC:...
Rocket Inc. is considering a project that has the following cash flow and WACC data. WACC: 10.00% Year 0    1 2 3 4 Cash flows -$1,000 $510 $440 $425 $405 What is the project's payback?    What is the project's discounted payback?    Is the project worthwhile to undertake? (Would you undertake the project?) Why?
Cremona Company is considering a project that has the following cash flow and WACC data. What...
Cremona Company is considering a project that has the following cash flow and WACC data. What is the project’s Discounted payback, NPV, and MIRR? Weighted Average Cost of Capital (WACC) of Cremona Company is 12% Year CF 0 (1,000,000) 1 350,000 2 600,000 3 200,000 4 350,000 5 300,000 Please explain & show work/steps
Masulis Inc. is considering a project that has the following cash flow and WACC data.  What is...
Masulis Inc. is considering a project that has the following cash flow and WACC data.  What is the project's discounted payback? WACC:  15.00% Year                            0                1                2                3                4     Cash flows              -$750         $525          $485          $445          $405 Hint: Discounted Payback period: The number of years required to recover a project’s cost. Cumulative cash flow computation takes into account the time value of money by using discounted cash flows. Group of answer choices 1.68 years 1.99 years 1.80 years 2.22 years 2.44 years
Global Group is considering a project that has the following cash flow and WACC data. What...
Global Group is considering a project that has the following cash flow and WACC data. What is the project's IRR? State in percentage terms without the percent sign symbol and round to the second decimal place. (Thus, 12.98756% would be written as 12.99 to be correct) WACC:           12.34% After Tax Salvage Value at end of year 4 = $200                                         Year                            0                      1                     2                     3                     4 Cash flows             -$1,600                 $450                  $450              ...
Fernando Designs is considering a project that has the following cash flow and WACC data. What...
Fernando Designs is considering a project that has the following cash flow and WACC data. What is the project's discounted payback? WACC: 10.00% Year 0 1 2 3 Cash flows -$650 $500 $500 $500
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT