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    2009-09-27 221702 Tmmoore

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    Syamsul Bachri
    Jordan Enterprises is considering a $42,000 capital expenditure project that would return $7,000 per year in after-tax cash flows for 10 years. The company's maximum acceptable payback period is 8 years. The payback period for this project is 6 years, so the company should accept the project since the payback period is less than the maximum of 8 years. The net present value was also calculated for two 20-year projects, one with a $10,000 initial investment and $2,000 annual cash inflows having a positive NPV of $3,246.26, and the other with a $25,000 initial investment and $3,000 annual cash inflows having a negative N

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    2009-09-27 221702 Tmmoore

    Uploaded by

    Syamsul Bachri
    2 views1 page
    Jordan Enterprises is considering a $42,000 capital expenditure project that would return $7,000 per year in after-tax cash flows for 10 years. The company's maximum acceptable payback period is 8 years. The payback period for this project is 6 years, so the company should accept the project since the payback period is less than the maximum of 8 years. The net present value was also calculated for two 20-year projects, one with a $10,000 initial investment and $2,000 annual cash inflows having a positive NPV of $3,246.26, and the other with a $25,000 initial investment and $3,000 annual cash inflows having a negative N

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    Jordan Enterprises is considering a $42,000 capital expenditure project that would return $7,000 per year in after-tax cash flows for 10 years. The company's maximum acceptable payback period is 8 years. The payback period for this project is 6 years, so the company should accept the project since the payback period is less than the maximum of 8 years. The net present value was also calculated for two 20-year projects, one with a $10,000 initial investment and $2,000 annual cash inflows having a positive NPV of $3,246.26, and the other with a $25,000 initial investment and $3,000 annual cash inflows having a negative N

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as doc, pdf, or txt
    2 views1 page

    2009-09-27 221702 Tmmoore

    Uploaded by

    Syamsul Bachri
    Jordan Enterprises is considering a $42,000 capital expenditure project that would return $7,000 per year in after-tax cash flows for 10 years. The company's maximum acceptable payback period is 8 years. The payback period for this project is 6 years, so the company should accept the project since the payback period is less than the maximum of 8 years. The net present value was also calculated for two 20-year projects, one with a $10,000 initial investment and $2,000 annual cash inflows having a positive NPV of $3,246.26, and the other with a $25,000 initial investment and $3,000 annual cash inflows having a negative N

    Copyright:

    © All Rights Reserved
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    of 1

    jordan enterprises is considering a capital expenditure that requires an initial investment

    of 42,000 and returns after tax cash inflows of 7,000 per year for 10 years, the firm has a
    maximum acceptable payback period of 8 years
    a. determine the payback period for this project
    $42,000 $7,000 6 years
    b. should the company accept the project?why or why not
    The company should accept the project, since 6 8
    calculate the net present value for the following 20 year projects comment on the
    acceptability of each, assume that the firm has an opportunity cost of 14%
    a. initial investment is 10,000;cash inflows are 2,000 per year
    NPV = $3,246.26
    b. initial investment is 25,000;cash inflows are 3,000 per year
    NPV = ($5,130.61)
    Project A should be accepted since it has a positive net present value

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