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1.
Proposal A: -year, -month cash payback period
Net Cash Cumulative
Year and Months Flow Net Cash Flows
Year 1
Year 2
Year 3
Year 4
Proposal B: -year, -month cash payback period
Net Cash Cumulative
Year and Months Flow Net Cash Flows
Year 1
Year 2
Year 3
Year 4
Proposal C: -year, -month cash payback period
Net Cash Cumulative
Year and Months Flow Net Cash Flows
Year 1
Year 2
Year 3
Year 4
Proposal D: -year, -month cash payback period
Net Cash Cumulative
Year and Months Flow Net Cash Flows
Year 1
Year 2
Year 3
Year 4
Problem 25(10)-6B
Name:
Section:
Payback Period
0%
[Key code here]
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2.
Proposal A:
Proposal B:
Proposal C:
Proposal D:
3.
Cash Payback Period Average Rate Accept for
Proposal Years Months of Return
Further Analysis?
A
B
C
D
4., 5.
Present Present
Value of Net Cash Value of Net
$1 at 12% Flow =Cash Flow
Year 1
Year 2
Year 3
Year 4
Year 5
Total
Amount to be invested
Net present value
Present value index
=
Net Present Value and Present Value Index
=
=
=
Average Rate of Return
Present Present
Value of Net Cash Value of Net
$1 at 12% Flow =Cash Flow
Year 1
Year 2
Year 3
Year 4
Year 5
Total
Amount to be invested
Net present value
Present value index
6., 7.
Based on net present value calculated in Part 4, the proposals should be ranked as follows:
Rank 1
Rank 2
Based on present value index calculated in Part 5, the proposals should be ranked as follows:
Rank 1
Rank 2
8.
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1.
Proposal A: 4 -year, 0 -month cash payback period
Net Cash Cumulative
Year and Months Flow Net Cash Flows
Year 1 full year 120,000$ 120,000$
Proposal B: 2 -year, 4 -month cash payback period
Net Cash Cumulative
Year and Months Flow Net Cash Flows
Year 1 full year 100,000$ 100,000$
Proposal C: 3 -year, 6 -month cash payback period
Net Cash Cumulative
Year and Months Flow Net Cash Flows
Year 1 full year 100,000$ 100,000$
Proposal D: 3 -year, 0 -month cash payback period
Net Cash Cumulative
Year and Months Flow Net Cash Flows
Year 1 full year 200,000$ 200,000$
Payback Period
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Instructions
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Problem 25(10)-6B
Name:
Solution
Section:
ON
2.
Proposal A:
3.
Cash Payback Period Average Rate Accept for
Proposal Years Months of Return
Further Analysis?
4., 5.
Present Present
Value of Net Cash Value of Net
$1 at 12% Flow
=Cash Flow
Year 1 0.893 100,000$ 89,300$
Present value index 1.13
Average Rate of Return
Net Present Value and Present Value Index
Proposal B:
Present Present
Value of Net Cash Value of Net
$1 at 12% Flow
=Cash Flow
Year 1 0.893 200,000$ 178,600$
6., 7.
Based on net present value calculated in Part 4, the proposals should be ranked as follows:
Proposal D:
