Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 9%.
0 1 2 3 4 Project A -1,100 600 390 270 320 Project B -1,100 200 325 420 770
What is Project A's payback? Round your answer to four decimal places. Do not round your intermediate calculations.
What is Project A's discounted payback? Round your answer to four decimal places. Do not round your intermediate calculations.
What is Project B's payback? Round your answer to four decimal places. Do not round your intermediate calculations.
What is Project B's discounted payback? Round your answer to four decimal places. Do not round your intermediate calculations.
Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 9%.
| 0 | 1 | 2 | 3 | 4 | ||||||
| Project A | -1,100 | 600 | 390 | 270 | 320 | |||||
| Project B | -1,100 | 200 | 325 | 420 | 770 | |||||
What is Project A's payback? Round your answer to four decimal places. Do not round your intermediate calculations.
What is Project A's discounted payback? Round your answer to four decimal places. Do not round your intermediate calculations.
What is Project B's payback? Round your answer to four decimal places. Do not round your intermediate calculations.
What is Project B's discounted payback? Round your answer to four decimal places. Do not round your intermediate calculations.
Related questions
Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 12%.
| 0 | 1 | 2 | 3 | 4 | ||||||
| Project A | -1,050 | 650 | 420 | 290 | 340 | |||||
| Project B | -1,050 | 250 | 355 | 440 | 790 | |||||
What is Project A's payback? Round your answer to four decimal places. Do not round your intermediate calculations.
years
What is Project A's discounted payback? Round your answer to four decimal places. Do not round your intermediate calculations.
years
What is Project B's payback? Round your answer to four decimal places. Do not round your intermediate calculations.
years
What is Project B's discounted payback? Round your answer to four decimal places. Do not round your intermediate calculations.
years
Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 8%.
| 0 | 1 | 2 | 3 | 4 | ||||||
| Project A | -1,200 | 700 | 430 | 200 | 250 | |||||
| Project B | -1,200 | 300 | 365 | 350 | 700 | |||||
What is Project A's payback? Round your answer to four decimal places. Do not round your intermediate calculations.
years
What is Project A's discounted payback? Round your answer to four decimal places. Do not round your intermediate calculations.
years
What is Project B's payback? Round your answer to four decimal places. Do not round your intermediate calculations.
years
What is Project B's discounted payback? Round your answer to four decimal places. Do not round your intermediate calculations.
years
