You are evaluating payback on a project.

The initial investment is $3000.

The project reduces cost $500 / year.

How many years to payback?

You are evaluating payback on a project.

The initial investment is $45000.

The project reduces cost $6500 / year.

You will only accept projects with payback under 7 years.

Does this project meet the payback test?

You are evaluating two projects to determine which has the highest present value.

Your cost of capital is 10%

Project A will generate additional margin of $7,500 a month for 5 years.

Project B will generate cost savings of $6,000 a month for 7 years.

Which project offers the highest present value A or B?

You are evaluating two projects to determine which has the lowest present value of costs.

Your cost of capital is 12%

Project A requires an initial investment of $200,000.

Project B initial cost is $0.

Project A will increase costs $45,000 a year for 5 years.

Project B will increase costs $75,000 a year for 7 years.

Which project has the lowest present value of costs A or B?

You are evaluating the benefit of a new piece of equipment.

The cost is $225,000.

The useful life of the equipment is 6 years.

The company cost of capital is 4%.

The equipment will save the firm $45,000 in year 1-3

The equipment will save the firm $35,000 in year 4, 5 & 6.

If the NPV of the project is greater than $50,000, you will buy

Will the purchase payback in 6 years?

Do you buy he equipment?

Please evaluate the investment below. Is the NPV greater than $50,000?

Initial investment: $500,000

Cost of Capital: 8%

Cash Flows: -10,000, +2,500, +45,000, +110,000, +250,000, +225,000, +225,000