A capital investment project is estimated to have the following after-tax cash flows: Year4 16,000 Year...

 

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A capital investment project is estimated to have the following after-tax cash flows: Year4 16,000 Year 0 ($35,000) Year 1 13,000 Year 2 $14,000 Year 3 $15,000 The company utilizes an 8% discount rate for capital project analysis. a. What is the PAYBACK for the project? b. What is the DISCOUNTED PAYBACK for the project? c. What is the NET PRESENT VALUE (NPV) for the project? d. What is the INTERNAL RATE OF RETURN (IRR) for the project? e. What is the PROFITABILITY INDEX for the project? f. Should you ACCEPT or REJECT the project based on your analysis? The policy your firm has for payback is to accept projects with payback equal to 3 years or less. A capital investment project is estimated to have the following after-tax cash flows: Year4 16,000 Year 0 ($35,000) Year 1 13,000 Year 2 $14,000 Year 3 $15,000 The company utilizes an 8% discount rate for capital project analysis. a. What is the PAYBACK for the project? b. What is the DISCOUNTED PAYBACK for the project? c. What is the NET PRESENT VALUE (NPV) for the project? d. What is the INTERNAL RATE OF RETURN (IRR) for the project? e. What is the PROFITABILITY INDEX for the project? f. Should you ACCEPT or REJECT the project based on your analysis? The policy your firm has for payback is to accept projects with payback equal to 3 years or less.

Answer rating: 100% (QA)

To calculate the payback discounted payback net present value NPV internal rate of return IRR and profitability index for the capital investment project we will use the provided aftertax cash flows an... View the full answer