Need help with a Finance Assignment about Payback period Jordan Enterprises
Subject
Business Finance
Question Description
Finance Assignment
P10–1 Payback period Jordan Enterprises is considering a capital expenditure that requires an initial investment of $42,000 and returns after-tax cash inflows of $7,000 per year for 10 years. The firm has a maximum acceptable payback period of 8 years.
a. Determine the payback period for this project.
b. Should the company accept the project? Why or why not?
P10–5 NPV Calculate the net present value (NPV) for the following 15-year projects. Comment on the acceptability of each. Assume that the firm has a cost of capital of 9%.
a. Initial investment is $1,000,000; cash inflows are $150,000 per year.
b. Initial investment is $2,500,000; cash inflows are $320,000 per year.
c. Initial investment is $3,000,000; cash inflows are $365,000 per year.
P10–22 Payback, NPV, and IRR Rieger International is attempting to evaluate the feasibility of investing $95,000 in a piece of equipment that has a 5-year life. The firm has estimated the cash inflows associated with the proposal as shown in the following table.The firm has a 12% cost of capital.