Check Your Work- Mozilla Firefox ezto.mheducation.com/hm.tpx Cash Flow Cash Flow
ID: 2613288 • Letter: C
Question
Check Your Work- Mozilla Firefox ezto.mheducation.com/hm.tpx Cash Flow Cash Flow Year -$344,000 $ 49,000 24,600 22,600 20,100 15,200 51,000 71,000 71,000 446,000 4 Whichever project you choose, if any, you require a 15 percent return on your investment. a-1 What is the payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Payback period Project A Project B 3.32 years years a-2 If you apply the payback criterion, which investment will you choose? OProject A OProject B b-1 What is the discounted payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Project A Project B Discounted payback period years 2.82 years b-2 If you apply the discounted payback criterion, which investment will you choose? OProject A OProject B c-1 What is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) NPV Project A Project B c-2 If you apply the NPV criterion, which investment will you choose? Project A Project B d-1 What is the IRR for each project? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)Explanation / Answer
Question a1 Cash Flows Payback Amount Payback Year year Project A Project B Project A Project B Project A Project B 0 -344000 -49000 1 51000 24600 51000 24600 1.00 1.00 2 71000 22600 71000 22600 1.00 1.00 3 71000 20100 71000 1800 1.00 0.09 4 446000 15200 151000 0.34 0.00 Total 344000 49000 3.34 2.09 Question a2 Project b returns the investment amount early. It will be selected. Question b1 pv factor Present Value Payback Cash Payback year year Project A Project B at 15% Project A Project B Project A Project B Project A Project B 0 -344000 -49000 1 -344000 -49000 1 51000 24600 0.869565 44347.83 21391.3 44347.83 21391.3 1.00 1.00 2 71000 22600 0.756144 53686.2 17088.85 53686.2 17088.85 1.00 1.00 3 71000 20100 0.657516 46683.65 13216.08 46683.65 10519.85 1.00 0.80 4 446000 15200 0.571753 255001.9 8690.649 199282.3 0.78 0.00 Total 55719.63 11386.88 344000 49000 3.78 2.80 Question b1 In the same way Project B is best opetion. Question c1. NPV Project A 55719.63 Project B 11386.88 Question c2. Project A is preferable.