What is the payback period for investment with cash flows
Question # 00766642
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Updated on: 06/24/2020 06:41 AM Due on: 07/02/2020
1. What is the payback period for a $16,700 investment with the following cash flows?
Year Cash Flow
1 $2,100
2 6,800
3 6,900
4 7,300
5 5,100
2. Company A is considering a project that will cost $60 million and have a year-end after-tax cash flow of $5 million in perpetuity. The before tax cost of debt is 8% and its unlevered cost of equity is 10%. The project has risk similar to that of the operation of the firm, and the target debt-equity ratio is 1.2. What is the NPV for the project if the tax rate is 35%?
A. $3,533,581.43
B. -$16,747,404.84
C. $1,804,697.16
D. $7,750,677.51
E. $7,732,359.21
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