The Sampson Company is considering a project that requires an initial outlay of $75,000 and produces cash inflows of $20,806 each year for five years Sampsons cost of capital is 10 a Calculate the projects payback period by making a single division rather than accumulating cash inflows Why is this ...

a 75000 20806 36 years The calculation is possible b ...

The Sampson Company is considering a project that requires an initial outlay of $75,000 and produces cash

Question:

The Sampson Company is considering a project that requires an initial outlay of $75,000 and produces cash inflows of $20,806 each year for five years. Sampson’s is 10%.
a. Calculate the project’s by making a single division rather than accumulating cash inflows. Why is this possible in this case?
b. Calculate the project’s IRR, recognizing the fact that the cash inflows are an annuity. Is the project acceptable? Did your calculation in this part result in any number(s) that were also calculated in part (a)? What is it about this problem that creates this similarity? Will this always happen in such cases?
c. What is the project’s NPV? Is the project acceptable according to NPV rules?

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,...