a. What is the payback period on each of the following projects? Cash Flows ($) Project...

  

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a. What is the payback period on each of the following projects? Cash Flows ($) Project Co C4 A -5,000 +1,000 +1,000 +3,000 B -1,000 +1,000 +2,000 +3,000 -5,000 +1,000 +1,000 +3,000 +5,000 b. Given that you wish to use the payback rule with a cutoff period of two years, which proj- ects would you accept? c. If you use a cutoff period of three years, which projects would you accept? d. If the opportunity cost of capital is 10%, which projects have positive NPVS? e. "If a firm uses a single cutoff period for all projects, it is likely to accept too many short- lived projects." True or false? f. If the firm uses the discounted-payback rule, will it accept any negative-NPV projects? Will it turn down positive-NPV projects? Explain. a. What is the payback period on each of the following projects? Cash Flows ($) Project Co C4 A -5,000 +1,000 +1,000 +3,000 B -1,000 +1,000 +2,000 +3,000 -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 proj- ects 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.

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Answer e True The payback rule ignore all cash flows after the cutoff date me... View the full answer