The expected profits from an $80,000 investment are $15,000 in Year 1 and $20,000 in each of Years 2 to 7 a What is the investments payback period b If the firms required payback period is four years, will it make the investment c If the firms cost of capital is 14 , will it make the investment bas...

a Cumulative profit after 4 years 75000 Cumulative profit ...

The expected profits from an $80,000 investment are $15,000 in Year 1 and $20,000 in each of

Question:

The expected profits from an $80,000 investment are $15,000 in Year 1 and $20,000 in each of Years 2 to 7.
a. What is the investment’s If the firm’s required is four years, will it make the investment?
c. If the firm’s is 14%, will it make the investment based on the NPV criterion?
Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of... Payback Period
Payback period method is a traditional method/ approach of capital budgeting. It is the simple and widely used quantitative method of Investment evaluation. Payback period is typically used to evaluate projects or investments before undergoing them,...