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Category > Business & Finance Posted 17 May 2017 My Price 12.00

What is the payback period

What is the payback period on each of the following projects?

Cash Flows ($)

Project

C0

C1

C2

C3

C4

A

-5,000

+1,000

+1,000

+3,000

0

B

-1,000

0

+1,000

+2,000

+3,000

C

-5,000

+1,000

+1,000

+3,000

+5,000

b. Given that you wish to use the payback rule with a cutoff period of two years, which projects would you accept?

c. If you use a cutoff period of three years, which projects would you accept?

d. If the opportunity cost of capital is 10%, which projects have positive NPVs?

e. “If a firm uses a single cutoff period for all projects, it is likely to accept too many short lived projects.” True or false?

f. If the firm uses the discounted-payback rule, will it accept any negative-NPV projects?

Will it turn down positive-NPV projects? Explain.

Answers

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Status NEW Posted 17 May 2017 09:05 AM My Price 12.00

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