**Page 305**

**Question 1. ****Calculating Payback[LO2]** What is the payback period for the following set of cash flows?

Don't use plagiarized sources. Get Your Custom Essay on

Page 305 Question 1. Calculating Payback[LO2] What Is The Payback Period For The Following Set Of Cash Flows? Year Cash Flow 0 −$7,600 1 1,900 2 2,900 3 2,300 4 1,700 Question 3. Calculating Payback[LO2] Siva, Inc., Imposes A Payback Cutoff Of Three Y

Just from $5/Page

Year |
Cash Flow |

0 | −$7,600 |

1 | 1,900 |

2 | 2,900 |

3 | 2,300 |

4 | 1,700 |

**Question 3. Calculating Payback[LO2]** Siva, Inc., imposes a payback cutoff of three years for its international investment projects. If the company has the following two projects available, should it accept either of them?.

Year |
Cash Flow (A) |
Cash Flow (B) |

0 | −$45,000 | −$ 55,000 |

1 | 16,000 | 13,000 |

2 | 21,000 | 15,000 |

3 | 15,000 | 24,000 |

4 | 9,000 | 255,000 |

** **

**Question 4. Calculating Discounted Payback[LO3]** An investment project has annual cash inflows of $2,800, $3,700, $5,100, and $4,300, for the next four years, respectively. The discount rate is 14 percent. What is the discounted payback period for these cash flows if the initial cost is $5,200? What if the initial cost is $5,400? What if it is $10,400

** **

**Page 306**

**Question6. Calculating AAR[LO4]** You’re trying to determine whether to expand your business by building a new manufacturing plant. The plant has an installation cost of $15 million, which will be depreciated straight-line to zero over its four-year life. If the plant has projected net income of $1,754,000, $1,820,500, $1,716,300, and $1,097,400 over these four years, what is the project’s average accounting return (AAR)?

**Question 7. Calculating IRR[LO5]** A firm evaluates all of its projects by applying the IRR rule. If the required return is 14 percent, should the firm accept the following project?

Year |
Cash Flow |

0 | −$26,000 |

1 | 11,000 |

2 | 14,000 |

3 | 10,000 |

**Question 8. Calculating NPV[LO1]** For the cash flows in the previous problem, suppose the firm uses the NPV decision rule. At a required return of 11 percent, should the firm accept this project? What if the required return is 24 percent?

**Page 307**

**Question 15. Calculating Profitability Index[LO7]** What is the profitability index for the following set of cash flows if the relevant discount rate is 10 percent? What if the discount rate is 15 percent? If it is 22 percent?

Year |
Cash Flow |

0 | −$15,300 |

1 | 9,400 |

2 | 7,600 |

3 | 4,300 |

**Question 16.Problems with Profitability Index[LO1,7]** The Sloan Corporation is trying to choose between the following two mutually exclusive design projects:

Year |
Cash Flow (I) |
Cash Flow (II) |

0 | −$51,000 | −$14,400 |

1 | 24,800 | 7,800 |

2 | 24,800 | 7,800 |

3 | 24,800 | 7,800 |

1. If the required return is 10 percent and the company applies the profitability index decision rule, which project should the firm accept?

2. If the company applies the NPV decision rule, which project should it take?

3. Explain why your answers in (a) and (b) are different.

** **

**Page 308**

**Question 17.** **Comparing Investment Criteria[LO1,2,3,5,7]** Consider the following two mutually exclusive projects:

Year |
Cash Flow (A) |
Cash Flow (B) |

0 | −$455,000 | −$65,000 |

1 | 58,000 | 31,000 |

2 | 85,000 | 28,000 |

3 | 85,000 | 25,000 |

4 | 572,000 | 19,000 |

Whichever project you choose, if any, you require a return of 11 percent on your investment.

1. If you apply the payback criterion, which investment will you choose? Why?

2. If you apply the discounted payback criterion, which investment will you choose? Why?

3. If you apply the NPV criterion, which investment will you choose? Why?

4. If you apply the IRR criterion, which investment will you choose? Why?

5. If you apply the profitability index criterion, which investment will you choose? Why?

6. Based on your answers in (a) through (e), which project will you finally choose? Why?

**Question 19. MIRR[LO6]** RAK Corp. is evaluating a project with the following cash flows:

Year |
Cash Flow |

0 | −$41,000 |

1 | 15,700 |

2 | 19,400 |

3 | 24,300 |

4 | 18,100 |

5 | −9,400 |

The company uses an interest rate of 10 percent on all of its projects. Calculate the MIRR of the project using all three methods.

Basic features

- Free title page and bibliography
- Unlimited revisions
- Plagiarism-free guarantee
- Money-back guarantee
- 24/7 support

On-demand options

- Writer’s samples
- Part-by-part delivery
- Overnight delivery
- Copies of used sources
- Expert Proofreading

Paper format

- 275 words per page
- 12 pt Arial/Times New Roman
- Double line spacing
- Any citation style (APA, MLA, Chicago/Turabian, Harvard)

We are committed to making our customer experience enjoyable and that we are keen on creating conditions where our customers feel secured and respected in their interactions with us.

With our qualified expert team who are available 24/7, we ensure that all our customer needs and concerns are met..

Our refund policy allows you to get your money back when you are eligible for a refund. In such a case, we guarantee that you will be paid back to your credit card. Another alternative we offer you is saving this money with us as a credit. Instead of processing the money back, keeping it with us would be an easier way to pay for next the orders you place

Read moreAll orders you place on our website are written from scratch. Our expert team ensures that they exercise professionalism, the laid down guidelines and ethical considerations which only allows crediting or acknowledging any information borrowed from scholarly sources by citing. In cases where plagiarism is confirmed, then the costumier to a full refund or a free paper revision depending on the customer’s request..

Read moreQuality is all our company is about and we make sure we hire the most qualified writers with outstanding academic qualifications in every field. To receive free revision the Company requires that the Customer provide the request within fourteen (14) days from the first completion date and within a period of thirty (30) days for dissertations.

Read moreWe understand that students are not allowed to seek help on their projects, papers and assignments from online writing services. We therefore strive to uphold the confidentiality that every student is entitled to. We will not share your personal information elsewhere. You are further guaranteed the full rights of originality and ownership for your paper once its finished.

Read moreBy placing an order with us, you agree to the service we provide. We will endear to do all that it takes to deliver a comprehensive paper as per your requirements. We also count on your cooperation to ensure that we deliver on this mandate.

Read more
The price is based on these factors:

Academic level

Number of pages

Urgency