i need help with 4-7 Last Name Student ID (your \"A\" number-don\'t put A, just

Question

i need help with 4-7

Last Name Student ID (your "A" number-don't put A, just the number) 5 910713 Questions Answers 7 1 An investment project provides cash inflows of $6,320 per year for eight years What is the project payback period if the initial cost is $20,100? Enter 0 if the project never pays back. 8 An investment project provides cash inflows of $10,040 in year 1; $9,560 in year 2; $10,820 in year 3; $7,380 in year 4 and $9,230 in year 5. What is the project payback period if the initial cost is $23,140? Enter O if the project never pays back. 2 9 You are buying a piece of equipment for $50,800. You will put $15,000 down and finance the remainder. Your opportunity cost is 4 percent for the equity portion and 11.2% percent for the loan portion. What discount rate should you use to evaluate this project? 3 10

Explanation / Answer

1-

initial investment

20100

annual cash flow

6320

payback period in years

initial investment/annual cash flow

3.18038

2-

initial investment

23140

year

cash flow

cumulative cash flow

1

10040

10040

2

9560

19600

3

10820

3540

amount to be recoverd

4

7380

5

9230

payback period in years = previous year of final recovery +(amount to be recovered/cash flow of the year of final recovery)

2+(3540/10820)

2.327172

3-

source

value

weight

cost of source

weight*source

equity

15000

0.295276

4

1.181102

debt

35800

0.704724

11.2

7.892913

50800

weighted average cost or discount rate

9.074016

1-

initial investment

20100

annual cash flow

6320

payback period in years

initial investment/annual cash flow

3.18038

2-

initial investment

23140

year

cash flow

cumulative cash flow

1

10040

10040

2

9560

19600

3

10820

3540

amount to be recoverd

4

7380

5

9230

payback period in years = previous year of final recovery +(amount to be recovered/cash flow of the year of final recovery)

2+(3540/10820)

2.327172

3-

source

value

weight

cost of source

weight*source

equity

15000

0.295276

4

1.181102

debt

35800

0.704724

11.2

7.892913

50800

weighted average cost or discount rate

9.074016

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