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Category > Business & Finance Posted 16 May 2017 My Price 8.00

Project K costs $50,000

 Project K costs $50,000, its expected cash inflows are $14,000 per year for 9 years, and its WACC is 12%. What is the project's payback? Round your answer to two decimal places.

2. Project K costs $40,000, its expected cash inflows are $9,000 per year for 8 years, and its WACC is 11%. What is the project's discounted payback? Round your answer to two decimal places.

3. Project K costs $50,000, its expected cash inflows are $8,000 per year for 12 years, and its WACC is 9%. What is the project's NPV? Round your answer to the nearest cent.

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    Best Answer
  • AnonymousAnonymous answered this 9 minutes later660 answers• 65% Best Answer
             
    1)        
    Cash outflows 50,000.00      
    Cash Inflows per Year 14,000.00      
    Cash inflows in first 3 years 42,000.00      
    Cash inflows required in 4 th year to cover cash outflow 8,000.00   0.57  
    Payback period = 3+ 8000/14000 3.57 Years      
    2)        
    Statement showing cash flows      
    Particulars Time PVF Amount PV
    Cash Outlows - 1.0000 (40,000.00) (40,000.00)
    PV of Cash Outflows       (40,000.00)
    Cash Inflows 1.00 0.90 9,000.00 8,108.11
    Cash Inflows 2.00 0.81 9,000.00 7,304.60
    Cash Inflows 3.00 0.73 9,000.00 6,580.72
    Cash Inflows 4.00 0.66 9,000.00 5,928.58
    Cash Inflows 5.00 0.59 9,000.00 5,341.06
    Cash Inflows 6.00 0.53 9,000.00 4,811.77
    Cash Inflows 7.00 0.48 9,000.00 4,334.93
    Cash Inflows 8.00 0.4339 9,000.00 3,905.34
    PV of Cash Inflows -     46,315.10
    NPV       6,315.10
    Cash inflows in first 6 years 38,075.00      
    Cash inflow required in 7 year 1,925.00      
    Discounted Payback period = 6 + 1925/4335 6.44 Years      
    3)        
    Statement showing cash flows      
    Particulars Time PVF Amount PV
    Cash Outlows - 1.0000 (50,000.00) (50,000.00)
    PV of Cash Outflows       (50,000.00)
    Cash Inflows 1.00 0.92 8,000.00 7,339.45
    Cash Inflows 2.00 0.84 8,000.00 6,733.44
    Cash Inflows 3.00 0.77 8,000.00 6,177.47
    Cash Inflows 4.00 0.71 8,000.00 5,667.40
    Cash Inflows 5.00 0.65 8,000.00 5,199.45
    Cash Inflows 6.00 0.60 8,000.00 4,770.14
    Cash Inflows 7.00 0.55 8,000.00 4,376.27
    Cash Inflows 8.00 0.5019 8,000.00 4,014.93
    Cash Inflows 9.00 0.4604 8,000.00 3,683.42
    Cash Inflows 10.00 0.4224 8,000.00 3,379.29
    Cash Inflows 11.00 0.3875 8,000.00 3,100.26
    Cash Inflows 12.00 0.3555 8,000.00 2,844.28
    PV of Cash Inflows -     57,285.80
    NPV       7,285.80
             
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  • AnonymousAnonymous answered this 13 hours laterWas this answer helpful? 0016 answers• 44% Best Answer

    1. Payback period = Initial by PriceMinus" style="font-family: inherit; font-size: inherit; font-style: inherit; font-variant: inherit; font-stretch: inherit; line-height: inherit; color: rgb(0, 102, 153); outline: none; left: auto; opacity: 1; top: auto; margin: 0px 0px 0px 3px !important; padding: 0px !important; border: 0px !important; font-weight: 700 !important; vertical-align: baseline !important; text-decoration: underline !important; box-sizing: border-box !important; bottom: auto !important; clip: auto !important; clear: none !important; display: inline-block !important; float: none !important; height: auto !important; max-height: none !important; max-width: none !important; min-height: 0px !important; min-width: 0px !important; overflow: visible !important; position: static !important; right: auto !important; text-transform: uppercase !important; -webkit-transform: none !important; transform: none !important; visibility: visible !important; width: auto !important; zoom: 1 !important; z-index: auto !important; background: 0px 0px !important;">INVESTMENT/cashflow per year = 50,000/14,000= 3.57 years

    2. Disc. Pay back period

    Year Cashflow Disc. Factor (1/(1+11%)^year) Discounted Cashflows Cumulative Disc. Cashflow
    1 9,000.00 0.90 8,108.11 8,108.11
    2 9,000.00 0.81 7,304.60 15,412.71
    3 9,000.00 0.73 6,580.72 21,993.43
    4 9,000.00 0.66 5,928.58 27,922.01
    5 9,000.00 0.59 5,341.06 33,263.07
    6 9,000.00 0.53 4,811.77 38,074.84
    7 9,000.00 0.48 4,334.93 42,409.77
    8 9,000.00 0.43 3,905.34 46,315.10

    Dis. Payback period = 6years+(40000-38074.84)/4334.93 =6.44 years.

    3.

    Year Cashflow Disc. Factor (1/(1+11%)^year) Discounted Cashflows Cumulative Disc. Cashflow
    1 8,000.00 0.92 7,339.45 7,339.45
    2 8,000.00 0.84 6,733.44 14,072.89
    3 8,000.00 0.77 6,177.47 20,250.36
    4 8,000.00 0.71 5,667.40 25,917.76
    5 8,000.00 0.65 5,199.45 31,117.21
    6 8,000.00 0.60 4,770.14 35,887.35
    7 8,000.00 0.55 4,376.27 40,263.62
    8 8,000.00 0.50 4,014.93 44,278.55
    9 8,000.00 0.46 3,683.42 47,961.98
    10 8,000.00 0.42 3,379.29 51,341.26
    11 8,000.00 0.39 3,100.26 54,441.52
    12 8,000.00 0.36 2,844.28 57,285.80

    NPV = 57285.80- 50000 = $7,285.5/- .

    Comment

Your answer Finance tutors who can help right nowMitasvil P.BITS Pilani643Andrew J.Washington University in St. Louis612Aaron J.Singapore Polytechnic1152See more tutors

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