A machine costs $300,000 right now and an extra $80,000 a year from now, and is...
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A machine costs $300,000 right now and an extra $80,000 a year from now, and is expected to produce the following cash flows: Year Cash flow ($ thousand) Year Cash flow ($ thousand) $ $ Your cost of capital is 8%/year. a. What is the project's PB (payback period)? b. What is the project's NPV? 1 50 $ 6 92 $ 2 57 $ 7 92 $ 3 75 $ 80 $ 85 (continue on next page) 8 4 80 $ 9 68 $ 5 10 50 (5 points) (15 points) c. What is the project's IRR? d. Using NPV, what is your investment decision? e. Using IRR, what is your investment decision? A machine costs $300,000 right now and an extra $80,000 a year from now, and is expected to produce the following cash flows: Year Cash flow ($ thousand) Year Cash flow ($ thousand) $ $ Your cost of capital is 8%/year. a. What is the project's PB (payback period)? b. What is the project's NPV? 1 50 $ 6 92 $ 2 57 $ 7 92 $ 3 75 $ 80 $ 85 (continue on next page) 8 4 80 $ 9 68 $ 5 10 50 (5 points) (15 points) c. What is the project's IRR? d. Using NPV, what is your investment decision? e. Using IRR, what is your investment decision?
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Answer Solution A Payback Period Payback period means the time by which the Project is able to recov... View the full answer
Related Book For
Fundamentals of Financial Management
ISBN: 978-1337395250
15th edition
Authors: Eugene F. Brigham, Joel F. Houston
Posted Date:
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