In: Finance

# Stern Associates is considering a project that has the following cash flow data. What is the...

Stern Associates is considering a project that has the following cash flow data. What is the project's payback? Show Work!

 Year 0 1 2 3 4 5 Cash flows -$1,000$400 $410$420 $430$440

## Solutions

##### Expert Solution

Answer: 2 years and 166 days ( 2.45 years)

Payback period

When the annual cash flows are not uniform, the cumulative cash inflows from operations must be calculated for each year. The payback period shall be corresponding period when total of cumulative cash inflows is equal to the initial capital investment. However, if exact sum does not match then the period in which it lies should be identified. After that we need to compute the fraction of the year.

##### Warr Company is considering a project that has the following cash flow data. What is the...
Warr Company is considering a project that has the following cash flow data. What is the project's IRR? Year 0 1 2 3 4 Cash flows -$1,415$400 $400$400 \$400
##### 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