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

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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 company’s 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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