Purchase Solution

Computing Net Present Value and Payback Period

Not what you're looking for?

Ask Custom Question

NEIL CORPORATION HAS 3 PROJECTS UNDER CONSIDERATION. THE CASH FLOWS FOR EA ITEM IS SHOWN. THE FIRM HAS 16% COST OF CAPITAL. All projects has a initial investment of $40,000.

CASH FLOWS
Project A PROJECT B PROJECT C

1ST YEAR $13,000 $7,000 $19,000
2ND " " $13,000 $10,000 $16,000
3RD "" $13,OOO $13,O00 $13,000
4T0 "" $13,000 $16,000 $10,000
5TH "" $13,000 $19,000 $7,000

A. CALCULATE THE PAYBACK PERIOD. WHICH IS PREFERRED ACCORDING TO THIS METHOD?
B. CALCULATE EACH PROJECT NPV. WHICH PROJECT IS PREFERRED ACCORDING TO THIS METHOD?
C. COMMENT ON YOUR FINDINGS IN PARTS A AND B RECOMMEND THE BEST PROJECT. EXPLAIN YOUR RECOMMENDATIONS.

Purchase this Solution

Solution Summary

Using an Excel 97-2003 spreadsheet, this solution illustrates the computation and comparison of the net present value of a project and its payback period.

Solution Preview

Because Project C provides both the fastest expected payback of ...

Purchase this Solution


Free BrainMass Quizzes
MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

Operations Management

This quiz tests a student's knowledge about Operations Management

Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.