evaluating a project that will cost $541,000, but is expected to produce cash flows of $129,000 per year for 10 years, with the first cash flow in one year. Your cost of capital is 10.8% and your company's preferred payback period is three years or less. a. What is the payback period of this project? The payback period is _____years. (Round to two decimal places.) b. Should you take the project if you want to increase the value of the company? If you want to increase the value of the company you (will/will not) take the project since the NPV is (positive/negative)
evaluating a project that will cost $541,000, but is expected to produce cash flows of $129,000 per year for 10 years, with the first cash flow in one year. Your cost of capital is 10.8% and your company's preferred payback period is three years or less. a. What is the payback period of this project? The payback period is _____years. (Round to two decimal places.) b. Should you take the project if you want to increase the value of the company? If you want to increase the value of the company you (will/will not) take the project since the NPV is (positive/negative)
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter26: Capital Investment Analysis
Section: Chapter Questions
Problem 3CMA
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3. You are evaluating a project that will cost $541,000, but is expected to produce cash flows of $129,000 per year for 10 years, with the first cash flow in one year. Your cost of capital is 10.8% and your company's preferred payback period is three years or less.
a. What is the payback period of this project?
The payback period is _____years. (Round to two decimal places.)
b. Should you take the project if you want to increase the value of the company?
If you want to increase the value of the company you (will/will not) take the project since the NPV is (positive/negative)
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