Suppose a company had an initial investment of $40,000. The cash flow for the next five years
Question:
Suppose a company had an initial investment of $40,000. The cash flow for the next five years are $14,000, $13,000, $15,000, $17,000, and $17,000, respectively. The interest rate is 8%. What is the discounted payback period?
2) Suppose a company had an initial investment of $45,000. The cash flow for the next five years are $14,000, $15,000, $16,000, $14,000, and $19,000, respectively. The interest rate is 8%. Enter your answers rounded to 2 DECIMAL PLACES.
a. What is the discounted payback period?
b. If the firm accepts projects with discounted payback periods of less than 3 years, will the project be accepted?
c. What is the NPV of the project?
3)LakeCraft is considering investing in a cruise ship with an expected life of 10 years that costs $70 million and will produce net cash flows of $12 million per year. LakeCraft's cost of capital is 5%. Enter your answers rounded to 2 DECIMAL PLACES.
a. What is the payback period?
b. What is the net present value (NPV) of the project?
Contemporary Business Mathematics with Canadian Applications
ISBN: 978-0134141084
11th edition
Authors: S. A. Hummelbrunner, Kelly Halliday, Ali R. Hassanlou, K. Suzanne Coombs