Question

Stewart Corporation is reviewing an investment proposal. The initial cost and related data for each year of the project’s life are presented in the schedule below. Stewart assumes that the cash flows take place at the end of the year. Stewart further assumes that the investment’s salvage value at the end of each year is equal to its then net book value, but Stewart does not expect there to be a salvage value at the end of the investment’s useful life.


Stewart uses a 24 percent after-tax target rate of return for new investment proposals.

Required
A. Calculate the payback period for the project.
B. Calculate the project’s net presentvalue.


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  • CreatedMarch 11, 2015
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