Calculation of Pay back period, Net present value
Please see attachment.
Consider the following projects:
Cash Flows ($)
Project C0 C1 C2 C3 C4 C5
A -1,000 +1,000 0 0 0 0
B -2,000 +1,000 +1,000 +4,000 +1,000 +1,000
C -3,000 +1,000 +1,000 0 +1,000 +1,000
a. If the opportunity cost of capital is 10 percent, which projects have a positive NPV?
b. Calculate the payback period for each project.
c. Which project(s) would a firm using the payback rule accept if the cutoff period is three years?
https://brainmass.com/business/net-present-value/calculation-of-pay-back-period-net-present-value-221024
Attachments
Solution Preview
Project C0 C1 C2 C3 C4 C5
A -1,000 1,000 0 0 0 0
B -2,000 1,000 1,000 4,000 1,000 1,000
C -3,000 1,000 1,000 0 1,000 1,000
a. If the opportunity cost of capital is 10 percent, which projects have a positive NPV?
b. Calculate the payback period for each project.
c. Which project(s) would a firm using the payback rule accept if the cutoff period is three ...
Solution Summary
The answer contains the computation of pay back period and Net present value