10 A company produces two boat models, Montauk and Orient. Both products are bei

Question

10 A company produces two boat models, Montauk and Orient. Both products are being considered for major investment projects next year. Relevant data follow: 12 13 14 15 16 17 Montaulk Orient New investment (cash outflow) (424,000) (380,000) 18 Expected 3-year net cash flows: 19 20 Year 1 Year 2 Year 3 150,000 160,000 170,000 130,000 130,000 130,000 21 23 24 25 26 27 28 29 REQUIRED: 1. Calulate the payback period for each of these investments. State your answers in years to 2 decimal points (e.g., 2.26 years). Assume that the cash flows shown occur evenly throughout the year. 2. Calculate the net present value of each of the investments assuming a "hurdle rate" of 6%. Enter your answers in the spaces below. You can show your calculations in the space provided at the right. 31 Instructions Question 1Question 2 Question 3 Question 4 Extra Credit

Explanation / Answer

Answer:-1)-

0

Paybaack period of Montauk = 2+$114000/$170000

= 2+.67 =2.67 years

Payback period of Orient =$380000/$130000

=2.92 years

2)-

Calculation of Payback Period Montauk Year Cash Flow $ Cumulative cash flow $

0

-424000 -424000 1 150000 -274000 2 160000 -114000 3 170000 56000

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.