Question: Suppose ABC Telecom Inc.?s CFO is evaluating a project with the following cash inflows. She does not know the project?s initial cost; however, she does

Suppose ABC Telecom Inc.?s CFO is evaluating a project with the following cash inflows. She does not know the project?s initial cost; however, she does know that the project?s regular payback period is 2.5 years. If the project?s WACC is 7%, what is its NPV? Year Cash Flow $352,447 Year 1 $325,000 $391,608 Year 2 $450,000 $430,769 $450 349 Year 3 $400,000 Year 4 $450,000 Which of the following statements indicate a disadvantage of using the discounted payback period for capital budgeting decisions? Check all that apply. The discounted payback period does not take the project?s entire life into account. The discounted payback period is calculated using net income instead of cash flows. The discounted payback period does not take the time value of money into account
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
