Text book : Cornett: Select Chapters

Finance: Applications & Theory 3 rd Edition w/Connect Plus

ISBN-10:1308108435 ISBN-13:9781308108438

EXTRA CREDIT Worth 5 points. The submitted assignment must be complete; no partial assignments will be graded.

Due by 11pm Friday 4/24/15 IN THE LAULIMA DROPBOX :)

On page 334 (Top of page) complete the Integrated Mini-case - Project Valuation.

Evaluate the project using the Payback period, discounted payback period, NPV, and IRR.

For each method, indicate whether the project would be accepted or rejected.

Page 334

Integrated mini-case project Valuation

Suppose your firm is considering investing in a project with the accompanying cash flows, that the required rate of return on projects of this risk class is 11 percent, and that eh maximum allowable payback and discounted payback statistics for your company are 3 and 3.5 years, respectively.

Time: 0 1 2 3 4 5

Cash flow -$175,000 -$65,800 $94,000 $41,000 $122,000 $81,200

Using every one of the capital budgeting decision methods discussed in this chapter, evaluate this

Project, indicating whether each decision rule would call for acceptance or rejection of the project.