The Inventive Co. is considering a new project. This project requires an initial cash investment of $84,000. The project will generate cash inflows of $14,000 in the first year. Then, the project will do nothing for two years, after which time cash inflows of $38,000 will be generated for four years. How long will it take the Inventive Co. to recover its $84,000 investment?
The net present value of a project\'s cash inflows is $12,933 at a 11.2 percent discount rate. The profitability index is 1.55 and the firm\'s tax rate is 26 percent. What is the initial cost of the project?
Solution
1-cost of project=84000
Cash inflows
1- 14000
2 0
3. 0
4. 38000
5. 38000
6. 38000
7. 38000
8 38000
Payback period is 4.842 years
It a confusion whether 2nd part is in contiuation of 1st one or its a different question
If its a part of question mentioned above initial investment is 84000
If its a another part then information is incomplete neither no of Year are Given nor amount of cash flow is given so ut is impossible to calculate initial investment
.
The Inventive Co- is considering a new project- This project requires.docx
1. The Inventive Co. is considering a new project. This project requires an initial cash investment
of $84,000. The project will generate cash inflows of $14,000 in the first year. Then, the project
will do nothing for two years, after which time cash inflows of $38,000 will be generated for
four years. How long will it take the Inventive Co. to recover its $84,000 investment?
The net present value of a project's cash inflows is $12,933 at a 11.2 percent discount rate. The
profitability index is 1.55 and the firm's tax rate is 26 percent. What is the initial cost of the
project?
Solution
1-cost of project=84000
Cash inflows
1- 14000
2 0
3. 0
4. 38000
5. 38000
6. 38000
7. 38000
8 38000
Payback period is 4.842 years
It a confusion whether 2nd part is in contiuation of 1st one or its a different question
If its a part of question mentioned above initial investment is 84000
2. If its a another part then information is incomplete neither no of Year are Given nor amount of
cash flow is given so ut is impossible to calculate initial investment
