Pay Back Period Assume that you are evaluating the following three mutually exclusive projects: Discounted Payback...
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Pay Back Period Assume that you are evaluating the following three mutually exclusive projects: Discounted Payback Period (15%) Cost Year 1 음 Year 2 Year 3 Year 4 Net Present. Value (15%) A $1,250.00 250.00 1,000.00 25.00 25.00 a. Calculate the following and show the rates of return as XX.XX%: A B $1,250.00 $1,250.00 375.00 125.00 625.00 125.00 125.00 12,500.00 B 750.00 1000.00 с Using this metric, which do you pick (A, B, or C)? b. Using these techniques only, which project would you recommend: ABC Use the following information to construct a cash budget for June through September and answer a, b, and c: • Actual sales in June are $125 and actual collections are $85 • Opening cash balance is $20, and $10 is to be maintained at all times Estimated sales are: • July August September October $150 $300 $225 $200 All sales are credit sales and are collected in the month following the sale. • Purchases in any month are 60% of next month's sales and are paid for in the month of purchase. Other cash expenses are $40 per month and depreciation is $10 per month. • Any cash shortfall can be immediately financed with proceeds from a line of credit. If a balance exists on the line of credit, all cash above the minimum balance will be applied to pay off that outstanding balance. a. What is the amount of net cash outflow in June is? b. What is the amount of net cash borrowing required at the end of June? c. What is the amount of cumulative borrowing at the end of September? Pay Back Period Assume that you are evaluating the following three mutually exclusive projects: Discounted Payback Period (15%) Cost Year 1 음 Year 2 Year 3 Year 4 Net Present. Value (15%) A $1,250.00 250.00 1,000.00 25.00 25.00 a. Calculate the following and show the rates of return as XX.XX%: A B $1,250.00 $1,250.00 375.00 125.00 625.00 125.00 125.00 12,500.00 B 750.00 1000.00 с Using this metric, which do you pick (A, B, or C)? b. Using these techniques only, which project would you recommend: ABC Use the following information to construct a cash budget for June through September and answer a, b, and c: • Actual sales in June are $125 and actual collections are $85 • Opening cash balance is $20, and $10 is to be maintained at all times Estimated sales are: • July August September October $150 $300 $225 $200 All sales are credit sales and are collected in the month following the sale. • Purchases in any month are 60% of next month's sales and are paid for in the month of purchase. Other cash expenses are $40 per month and depreciation is $10 per month. • Any cash shortfall can be immediately financed with proceeds from a line of credit. If a balance exists on the line of credit, all cash above the minimum balance will be applied to pay off that outstanding balance. a. What is the amount of net cash outflow in June is? b. What is the amount of net cash borrowing required at the end of June? c. What is the amount of cumulative borrowing at the end of September?
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a Lets calculate the Payback Period Discounted Payback Period using a discount rate of 15 and Net Present Value NPV for each project Project A Payback ... View the full answer
Related Book For
Financial Management Theory and Practice
ISBN: 978-1305632295
15th edition
Authors: Eugene F. Brigham, Michael C. Ehrhardt
Posted Date:
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