Info

5,000

425,000

4. Calculating Discounted Payback An investment project has annual cash inflows of $7,000, $7,500, $8,000, and $8,500, and a discount rate of 12 percent. What is the discounted payback period for these cash flows if the initial cost is $8,000? What if the initial cost is $13,000? What if it is $18,000?

5. Calculating Discounted Payback An investment project costs $8,000 and has annual cash flows of $1,700 for six years. What is the discounted payback period if the discount rate is zero percent? What if the discount rate is 5 percent? If it is 15 percent?

6. Calculating AAR You're trying to determine whether or not to expand your business by building a new manufacturing plant. The plant has an installation cost of $12 million, which will be depreciated straight-line to zero over its four-year life. If the plant has projected net income of $1,416,000, $1,032,000, $1,562,000, and $985,000 over these four years, what is the project's average accounting return (AAR)?

7. Calculating IRR A firm evaluates all of its projects by applying the IRR rule. If the required return is 18 percent, should the firm accept the following project?

Year

Cash Flow

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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