If the opportunity cost of capital is 10%, what is the NPV for each project? (Ne
ID: 2760037 • Letter: I
Question
If the opportunity cost of capital is 10%, what is the NPV for each project? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.)
Calculate the payback period for each project. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Calculate the discounted payback period for each project. (Enter 0 if the payback period cannot be calculated. Do not round intermediate calculations. Round your answers to 2 decimal places.)
Which project(s) would a firm using the discounted payback rule accept if the cutoff period were three years?
Consider the following projects:Explanation / Answer
a-1. If the opportunity cost of capital is 10%, what is the NPV for each project? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.) Project NPV A $ -148.76 B $ 4,979.42 C $ 882.77 a-2. Which project(s) have a positive NPV? a Project B and Project C Project A Project C Project B Project A and Project C Project A and Project B b. Calculate the payback period for each project. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Project Payback Period A year(s) 1 year, since the entire amount is recovered B year(s) 2 years C year(s) 3 years 6 months (Year 3 Cash Inflow is 0) c. Which project(s) would a firm using the payback rule accept if the cutoff period were three years? Project A and Project C Project B Project B and Project C Project A Project C a Project A and Project B d. Calculate the discounted payback period for each project. (Enter 0 if the payback period cannot be calculated. Do not round intermediate calculations. Round your answers to 2 decimal places.) Project Discounted Payback Period A year(s) 0 years (since the answer is infinity) B year(s) 2.13 years C year(s) 4.13 years e. Which project(s) would a firm using the discounted payback rule accept if the cutoff period were three years? Project A Project B Project C Project B and Project C a Project A and Project B Project A and Project C