Project K costs $50,000

Project K costs $50,000, its expected cash inflows are $14,000 per year for 9 years, and its WACC is 12%. What is the project’s payback? Round your answer to two decimal places.

2. Project K costs $40,000, its expected cash inflows are $9,000 per year for 8 years, and its WACC is 11%. What is the project’s discounted payback? Round your answer to two decimal places.

3. Project K costs $50,000, its expected cash inflows are $8,000 per year for 12 years, and its WACC is 9%. What is the project’s NPV? Round your answer to the nearest cent.

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    • Best Answer

    • AnonymousAnonymous answered this 9 minutes later660 answers• 65% Best Answer
      1)
      Cash outflows 50,000.00
      Cash Inflows per Year 14,000.00
      Cash inflows in first 3 years 42,000.00
      Cash inflows required in 4 th year to cover cash outflow 8,000.00 0.57
      Payback period = 3+ 8000/14000 3.57 Years
      2)
      Statement showing cash flows
      Particulars Time PVF Amount PV
      Cash Outlows 1.0000 (40,000.00) (40,000.00)
      PV of Cash Outflows (40,000.00)
      Cash Inflows 1.00 0.90 9,000.00 8,108.11
      Cash Inflows 2.00 0.81 9,000.00 7,304.60
      Cash Inflows 3.00 0.73 9,000.00 6,580.72
      Cash Inflows 4.00 0.66 9,000.00 5,928.58
      Cash Inflows 5.00 0.59 9,000.00 5,341.06
      Cash Inflows 6.00 0.53 9,000.00 4,811.77
      Cash Inflows 7.00 0.48 9,000.00 4,334.93
      Cash Inflows 8.00 0.4339 9,000.00 3,905.34
      PV of Cash Inflows 46,315.10
      NPV 6,315.10
      Cash inflows in first 6 years 38,075.00
      Cash inflow required in 7 year 1,925.00
      Discounted Payback period = 6 + 1925/4335 6.44 Years
      3)
      Statement showing cash flows
      Particulars Time PVF Amount PV
      Cash Outlows 1.0000 (50,000.00) (50,000.00)
      PV of Cash Outflows (50,000.00)
      Cash Inflows 1.00 0.92 8,000.00 7,339.45
      Cash Inflows 2.00 0.84 8,000.00 6,733.44
      Cash Inflows 3.00 0.77 8,000.00 6,177.47
      Cash Inflows 4.00 0.71 8,000.00 5,667.40
      Cash Inflows 5.00 0.65 8,000.00 5,199.45
      Cash Inflows 6.00 0.60 8,000.00 4,770.14
      Cash Inflows 7.00 0.55 8,000.00 4,376.27
      Cash Inflows 8.00 0.5019 8,000.00 4,014.93
      Cash Inflows 9.00 0.4604 8,000.00 3,683.42
      Cash Inflows 10.00 0.4224 8,000.00 3,379.29
      Cash Inflows 11.00 0.3875 8,000.00 3,100.26
      Cash Inflows 12.00 0.3555 8,000.00 2,844.28
      PV of Cash Inflows 57,285.80
      NPV 7,285.80

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More Answers

  • AnonymousAnonymous answered this 13 hours laterWas this answer helpful? 0016 answers• 44% Best Answer1. Payback period = Initial by PriceMinus” style=”font-family: inherit; font-size: inherit; font-style: inherit; font-variant: inherit; font-stretch: inherit; line-height: inherit; color: rgb(0, 102, 153); outline: none; left: auto; opacity: 1; top: auto; margin: 0px 0px 0px 3px !important; padding: 0px !important; border: 0px !important; font-weight: 700 !important; vertical-align: baseline !important; text-decoration: underline !important; box-sizing: border-box !important; bottom: auto !important; clip: auto !important; clear: none !important; display: inline-block !important; float: none !important; height: auto !important; max-height: none !important; max-width: none !important; min-height: 0px !important; min-width: 0px !important; overflow: visible !important; position: static !important; right: auto !important; text-transform: uppercase !important; -webkit-transform: none !important; transform: none !important; visibility: visible !important; width: auto !important; zoom: 1 !important; z-index: auto !important; background: 0px 0px !important;”>INVESTMENT/cashflow per year = 50,000/14,000= 3.57 years2. Disc. Pay back period
    Year Cashflow Disc. Factor (1/(1+11%)^year) Discounted Cashflows Cumulative Disc. Cashflow
    1 9,000.00 0.90 8,108.11 8,108.11
    2 9,000.00 0.81 7,304.60 15,412.71
    3 9,000.00 0.73 6,580.72 21,993.43
    4 9,000.00 0.66 5,928.58 27,922.01
    5 9,000.00 0.59 5,341.06 33,263.07
    6 9,000.00 0.53 4,811.77 38,074.84
    7 9,000.00 0.48 4,334.93 42,409.77
    8 9,000.00 0.43 3,905.34 46,315.10

    Dis. Payback period = 6years+(40000-38074.84)/4334.93 =6.44 years.

    3.

    Year Cashflow Disc. Factor (1/(1+11%)^year) Discounted Cashflows Cumulative Disc. Cashflow
    1 8,000.00 0.92 7,339.45 7,339.45
    2 8,000.00 0.84 6,733.44 14,072.89
    3 8,000.00 0.77 6,177.47 20,250.36
    4 8,000.00 0.71 5,667.40 25,917.76
    5 8,000.00 0.65 5,199.45 31,117.21
    6 8,000.00 0.60 4,770.14 35,887.35
    7 8,000.00 0.55 4,376.27 40,263.62
    8 8,000.00 0.50 4,014.93 44,278.55
    9 8,000.00 0.46 3,683.42 47,961.98
    10 8,000.00 0.42 3,379.29 51,341.26
    11 8,000.00 0.39 3,100.26 54,441.52
    12 8,000.00 0.36 2,844.28 57,285.80

    NPV = 57285.80- 50000 = $7,285.5/- .

    Comment

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