examplenpv - net present value (NPV) if the required rate...

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Examples Capital Budgeting Decision Title: Payback period Sample 1. What is the payback period for a $20,000 project that is expected to return $6000 for the first two years and $3000 for years three through five? 2. Determine the payback period (in years) for a project that costs $120,000 and would yield after-tax cash flows of $20,000 the first year, $22,000 the second year, $25,000 the third year, $27,000 the fourth year, $31,000 the fifth year, and $37,000 the sixth year. Title: NPV with equal CF 3. ABC manufacturing company considers purchasing a new machine for $15,000 that will provide an annual net cash flow of $6,000 per year for four years. Calculate the
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Unformatted text preview: net present value (NPV) if the required rate of return is 12%. Title: IRR with equal CF 4. Initial Outlay Cash Flow in Period 0 1 2 3 4-$20,000 $7,400 $7,400 $7,400 $7,400 What is the Internal Rate of Return (to nearest whole percent)? If companys required rate of return is 10%, what is your decision? Title: NPV with unequal CF 5. ABC Company is considering a 3-year project that has a cost of $100,000. The project will generate after-tax cash flows of $50,000 in year one, $40,000 in year two, and $30,000 in year three. Assume that the firm's proper rate of discount is 10%. What is the project's Net Present Value? If required rate is 12%, NPV? IRR?...
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