1. Compute the NPV for Project K if the appropriate cost of capital is 5 percent
ID: 2742854 • Letter: 1
Question
1. Compute the NPV for Project K if the appropriate cost of capital is 5 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Project K Time: 0 1 2 3 4 5
Cash flow –$11,100 $5,550 $6,550 $6,550 $5,550 –$11,100 NPV $ ___?
Should the project be accepted or rejected? Accepted Rejected
2.Compute the payback statistic for Project B if the appropriate cost of capital is 10 percent and the maximum allowable payback period is three years. (Round your answer to 2 decimal places. If the project never pays back, then enter a "0" (zero).)
Project B Time: 0 1 2 3 4 5 Cash flow –$12,900 $3,540 $4,560 $1,900 $0 $1,380
Explanation / Answer
1.
Project should be accepted due to positive NPV.
2.
K 1.05 Year Cash OutflowsFlows PVF@ 5 % PV 0 -11100 1 -11100 1 5550 0.952 5286 2 6550 0.907 5941 3 6550 0.864 5658 4 5550 0.823 5785 5 -11100 0.784 22670 NPV 34240Related Questions
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