Current File : /var/www/html/conference/public/bf28jn8/cache/e957b1b10955d0af9a39936227881522
a:5:{s:8:"template";s:15011:"<!DOCTYPE html>
<html lang="en">
<head>
<meta charset="UTF-8"/>
<meta content="IE=edge" http-equiv="X-UA-Compatible">
<meta content="text/html; charset=utf-8" http-equiv="Content-Type">
<meta content="width=device-width, initial-scale=1, maximum-scale=1" name="viewport">
<title>{{ keyword }}</title>
<style rel="stylesheet" type="text/css">.wc-block-product-categories__button:not(:disabled):not([aria-disabled=true]):hover{background-color:#fff;color:#191e23;box-shadow:inset 0 0 0 1px #e2e4e7,inset 0 0 0 2px #fff,0 1px 1px rgba(25,30,35,.2)}.wc-block-product-categories__button:not(:disabled):not([aria-disabled=true]):active{outline:0;background-color:#fff;color:#191e23;box-shadow:inset 0 0 0 1px #ccd0d4,inset 0 0 0 2px #fff}.wc-block-product-search .wc-block-product-search__button:not(:disabled):not([aria-disabled=true]):hover{background-color:#fff;color:#191e23;box-shadow:inset 0 0 0 1px #e2e4e7,inset 0 0 0 2px #fff,0 1px 1px rgba(25,30,35,.2)}.wc-block-product-search .wc-block-product-search__button:not(:disabled):not([aria-disabled=true]):active{outline:0;background-color:#fff;color:#191e23;box-shadow:inset 0 0 0 1px #ccd0d4,inset 0 0 0 2px #fff} *{box-sizing:border-box}.fusion-clearfix{clear:both;zoom:1}.fusion-clearfix:after,.fusion-clearfix:before{content:" ";display:table}.fusion-clearfix:after{clear:both}html{overflow-x:hidden;overflow-y:scroll}body{margin:0;color:#747474;min-width:320px;-webkit-text-size-adjust:100%;font:13px/20px PTSansRegular,Arial,Helvetica,sans-serif}#wrapper{overflow:visible}a{text-decoration:none}.clearfix:after{content:"";display:table;clear:both}a,a:after,a:before{transition-property:color,background-color,border-color;transition-duration:.2s;transition-timing-function:linear}#main{padding:55px 10px 45px;clear:both}.fusion-row{margin:0 auto;zoom:1}.fusion-row:after,.fusion-row:before{content:" ";display:table}.fusion-row:after{clear:both}.fusion-columns{margin:0 -15px}footer,header,main,nav,section{display:block}.fusion-header-wrapper{position:relative;z-index:10010}.fusion-header-sticky-height{display:none}.fusion-header{padding-left:30px;padding-right:30px;-webkit-backface-visibility:hidden;backface-visibility:hidden;transition:background-color .25s ease-in-out}.fusion-logo{display:block;float:left;max-width:100%;zoom:1}.fusion-logo:after,.fusion-logo:before{content:" ";display:table}.fusion-logo:after{clear:both}.fusion-logo a{display:block;max-width:100%}.fusion-main-menu{float:right;position:relative;z-index:200;overflow:hidden}.fusion-header-v1 .fusion-main-menu:hover{overflow:visible}.fusion-main-menu>ul>li:last-child{padding-right:0}.fusion-main-menu ul{list-style:none;margin:0;padding:0}.fusion-main-menu ul a{display:block;box-sizing:content-box}.fusion-main-menu li{float:left;margin:0;padding:0;position:relative;cursor:pointer}.fusion-main-menu>ul>li{padding-right:45px}.fusion-main-menu>ul>li>a{display:-ms-flexbox;display:flex;-ms-flex-align:center;align-items:center;line-height:1;-webkit-font-smoothing:subpixel-antialiased}.fusion-main-menu .fusion-dropdown-menu{overflow:hidden}.fusion-caret{margin-left:9px}.fusion-mobile-menu-design-modern .fusion-header>.fusion-row{position:relative}body:not(.fusion-header-layout-v6) .fusion-header{-webkit-transform:translate3d(0,0,0);-moz-transform:none}.fusion-footer-widget-area{overflow:hidden;position:relative;padding:43px 10px 40px;border-top:12px solid #e9eaee;background:#363839;color:#8c8989;-webkit-backface-visibility:hidden;backface-visibility:hidden}.fusion-footer-widget-area .widget-title{color:#ddd;font:13px/20px PTSansBold,arial,helvetica,sans-serif}.fusion-footer-widget-area .widget-title{margin:0 0 28px;text-transform:uppercase}.fusion-footer-widget-column{margin-bottom:50px}.fusion-footer-widget-column:last-child{margin-bottom:0}.fusion-footer-copyright-area{z-index:10;position:relative;padding:18px 10px 12px;border-top:1px solid #4b4c4d;background:#282a2b}.fusion-copyright-content{display:table;width:100%}.fusion-copyright-notice{display:table-cell;vertical-align:middle;margin:0;padding:0;color:#8c8989;font-size:12px}.fusion-body p.has-drop-cap:not(:focus):first-letter{font-size:5.5em}p.has-drop-cap:not(:focus):first-letter{float:left;font-size:8.4em;line-height:.68;font-weight:100;margin:.05em .1em 0 0;text-transform:uppercase;font-style:normal}:root{--button_padding:11px 23px;--button_font_size:13px;--button_line_height:16px}@font-face{font-display:block;font-family:'Antic Slab';font-style:normal;font-weight:400;src:local('Antic Slab Regular'),local('AnticSlab-Regular'),url(https://fonts.gstatic.com/s/anticslab/v8/bWt97fPFfRzkCa9Jlp6IacVcWQ.ttf) format('truetype')}@font-face{font-display:block;font-family:'Open Sans';font-style:normal;font-weight:400;src:local('Open Sans Regular'),local('OpenSans-Regular'),url(https://fonts.gstatic.com/s/opensans/v17/mem8YaGs126MiZpBA-UFVZ0e.ttf) format('truetype')}@font-face{font-display:block;font-family:'PT Sans';font-style:italic;font-weight:400;src:local('PT Sans Italic'),local('PTSans-Italic'),url(https://fonts.gstatic.com/s/ptsans/v11/jizYRExUiTo99u79D0e0x8mN.ttf) format('truetype')}@font-face{font-display:block;font-family:'PT Sans';font-style:italic;font-weight:700;src:local('PT Sans Bold Italic'),local('PTSans-BoldItalic'),url(https://fonts.gstatic.com/s/ptsans/v11/jizdRExUiTo99u79D0e8fOydLxUY.ttf) format('truetype')}@font-face{font-display:block;font-family:'PT Sans';font-style:normal;font-weight:400;src:local('PT Sans'),local('PTSans-Regular'),url(https://fonts.gstatic.com/s/ptsans/v11/jizaRExUiTo99u79D0KEwA.ttf) format('truetype')}@font-face{font-display:block;font-family:'PT Sans';font-style:normal;font-weight:700;src:local('PT Sans Bold'),local('PTSans-Bold'),url(https://fonts.gstatic.com/s/ptsans/v11/jizfRExUiTo99u79B_mh0O6tKA.ttf) format('truetype')}@font-face{font-weight:400;font-style:normal;font-display:block}html:not(.avada-html-layout-boxed):not(.avada-html-layout-framed),html:not(.avada-html-layout-boxed):not(.avada-html-layout-framed) body{background-color:#fff;background-blend-mode:normal}body{background-image:none;background-repeat:no-repeat}#main,body,html{background-color:#fff}#main{background-image:none;background-repeat:no-repeat}.fusion-header-wrapper .fusion-row{padding-left:0;padding-right:0}.fusion-header .fusion-row{padding-top:0;padding-bottom:0}a:hover{color:#74a6b6}.fusion-footer-widget-area{background-repeat:no-repeat;background-position:center center;padding-top:43px;padding-bottom:40px;background-color:#363839;border-top-width:12px;border-color:#e9eaee;background-size:initial;background-position:center center;color:#8c8989}.fusion-footer-widget-area>.fusion-row{padding-left:0;padding-right:0}.fusion-footer-copyright-area{padding-top:18px;padding-bottom:16px;background-color:#282a2b;border-top-width:1px;border-color:#4b4c4d}.fusion-footer-copyright-area>.fusion-row{padding-left:0;padding-right:0}.fusion-footer footer .fusion-row .fusion-columns{display:block;-ms-flex-flow:wrap;flex-flow:wrap}.fusion-footer footer .fusion-columns{margin:0 calc((15px) * -1)}.fusion-footer footer .fusion-columns .fusion-column{padding-left:15px;padding-right:15px}.fusion-footer-widget-area .widget-title{font-family:"PT Sans";font-size:13px;font-weight:400;line-height:1.5;letter-spacing:0;font-style:normal;color:#ddd}.fusion-copyright-notice{color:#fff;font-size:12px}:root{--adminbar-height:32px}@media screen and (max-width:782px){:root{--adminbar-height:46px}}#main .fusion-row,.fusion-footer-copyright-area .fusion-row,.fusion-footer-widget-area .fusion-row,.fusion-header-wrapper .fusion-row{max-width:1100px}html:not(.avada-has-site-width-percent) #main,html:not(.avada-has-site-width-percent) .fusion-footer-copyright-area,html:not(.avada-has-site-width-percent) .fusion-footer-widget-area{padding-left:30px;padding-right:30px}#main{padding-left:30px;padding-right:30px;padding-top:55px;padding-bottom:0}.fusion-sides-frame{display:none}.fusion-header .fusion-logo{margin:31px 0 31px 0}.fusion-main-menu>ul>li{padding-right:30px}.fusion-main-menu>ul>li>a{border-color:transparent}.fusion-main-menu>ul>li>a:not(.fusion-logo-link):not(.fusion-icon-sliding-bar):hover{border-color:#74a6b6}.fusion-main-menu>ul>li>a:not(.fusion-logo-link):hover{color:#74a6b6}body:not(.fusion-header-layout-v6) .fusion-main-menu>ul>li>a{height:84px}.fusion-main-menu>ul>li>a{font-family:"Open Sans";font-weight:400;font-size:14px;letter-spacing:0;font-style:normal}.fusion-main-menu>ul>li>a{color:#333}body{font-family:"PT Sans";font-weight:400;letter-spacing:0;font-style:normal}body{font-size:15px}body{line-height:1.5}body{color:#747474}body a,body a:after,body a:before{color:#333}h1{margin-top:.67em;margin-bottom:.67em}.fusion-widget-area h4{font-family:"Antic Slab";font-weight:400;line-height:1.5;letter-spacing:0;font-style:normal}.fusion-widget-area h4{font-size:13px}.fusion-widget-area h4{color:#333}h4{margin-top:1.33em;margin-bottom:1.33em}body:not(:-moz-handler-blocked) .avada-myaccount-data .addresses .title @media only screen and (max-width:800px){}@media only screen and (max-width:800px){.fusion-mobile-menu-design-modern.fusion-header-v1 .fusion-header{padding-top:20px;padding-bottom:20px}.fusion-mobile-menu-design-modern.fusion-header-v1 .fusion-header .fusion-row{width:100%}.fusion-mobile-menu-design-modern.fusion-header-v1 .fusion-logo{margin:0!important}.fusion-header .fusion-row{padding-left:0;padding-right:0}.fusion-header-wrapper .fusion-row{padding-left:0;padding-right:0;max-width:100%}.fusion-footer-copyright-area>.fusion-row,.fusion-footer-widget-area>.fusion-row{padding-left:0;padding-right:0}.fusion-mobile-menu-design-modern.fusion-header-v1 .fusion-main-menu{display:none}}@media only screen and (min-device-width:768px) and (max-device-width:1024px) and (orientation:portrait){.fusion-columns-4 .fusion-column:first-child{margin-left:0}.fusion-column{margin-right:0}#wrapper{width:auto!important}.fusion-columns-4 .fusion-column{width:50%!important;float:left!important}.fusion-columns-4 .fusion-column:nth-of-type(2n+1){clear:both}#footer>.fusion-row,.fusion-header .fusion-row{padding-left:0!important;padding-right:0!important}#main,.fusion-footer-widget-area,body{background-attachment:scroll!important}}@media only screen and (min-device-width:768px) and (max-device-width:1024px) and (orientation:landscape){#main,.fusion-footer-widget-area,body{background-attachment:scroll!important}}@media only screen and (max-width:800px){.fusion-columns-4 .fusion-column:first-child{margin-left:0}.fusion-columns .fusion-column{width:100%!important;float:none;box-sizing:border-box}.fusion-columns .fusion-column:not(.fusion-column-last){margin:0 0 50px}#wrapper{width:auto!important}.fusion-copyright-notice{display:block;text-align:center}.fusion-copyright-notice{padding:0 0 15px}.fusion-copyright-notice:after{content:"";display:block;clear:both}.fusion-footer footer .fusion-row .fusion-columns .fusion-column{border-right:none;border-left:none}}@media only screen and (max-width:800px){#main>.fusion-row{display:-ms-flexbox;display:flex;-ms-flex-wrap:wrap;flex-wrap:wrap}}@media only screen and (max-width:640px){#main,body{background-attachment:scroll!important}}@media only screen and (max-device-width:640px){#wrapper{width:auto!important;overflow-x:hidden!important}.fusion-columns .fusion-column{float:none;width:100%!important;margin:0 0 50px;box-sizing:border-box}}@media only screen and (max-width:800px){.fusion-columns-4 .fusion-column:first-child{margin-left:0}.fusion-columns .fusion-column{width:100%!important;float:none;-webkit-box-sizing:border-box;box-sizing:border-box}.fusion-columns .fusion-column:not(.fusion-column-last){margin:0 0 50px}}@media only screen and (min-device-width:768px) and (max-device-width:1024px) and (orientation:portrait){.fusion-columns-4 .fusion-column:first-child{margin-left:0}.fusion-column{margin-right:0}.fusion-columns-4 .fusion-column{width:50%!important;float:left!important}.fusion-columns-4 .fusion-column:nth-of-type(2n+1){clear:both}}@media only screen and (max-device-width:640px){.fusion-columns .fusion-column{float:none;width:100%!important;margin:0 0 50px;-webkit-box-sizing:border-box;box-sizing:border-box}}</style>
</head>
<body>
<div id="boxed-wrapper">
<div class="fusion-sides-frame"></div>
<div class="fusion-wrapper" id="wrapper">
<div id="home" style="position:relative;top:-1px;"></div>
<header class="fusion-header-wrapper">
<div class="fusion-header-v1 fusion-logo-alignment fusion-logo-left fusion-sticky-menu- fusion-sticky-logo-1 fusion-mobile-logo-1 fusion-mobile-menu-design-modern">
<div class="fusion-header-sticky-height"></div>
<div class="fusion-header">
<div class="fusion-row">
<div class="fusion-logo" data-margin-bottom="31px" data-margin-left="0px" data-margin-right="0px" data-margin-top="31px">
<a class="fusion-logo-link" href="{{ KEYWORDBYINDEX-ANCHOR 0 }}">{{ KEYWORDBYINDEX 0 }}<h1>{{ keyword }}</h1>
</a>
</div> <nav aria-label="Main Menu" class="fusion-main-menu"><ul class="fusion-menu" id="menu-menu"><li class="menu-item menu-item-type-post_type menu-item-object-page current_page_parent menu-item-1436" data-item-id="1436" id="menu-item-1436"><a class="fusion-bar-highlight" href="{{ KEYWORDBYINDEX-ANCHOR 1 }}"><span class="menu-text">Blog</span></a></li><li class="menu-item menu-item-type-post_type menu-item-object-page menu-item-14" data-item-id="14" id="menu-item-14"><a class="fusion-bar-highlight" href="{{ KEYWORDBYINDEX-ANCHOR 2 }}"><span class="menu-text">About</span></a></li><li class="menu-item menu-item-type-post_type menu-item-object-page menu-item-has-children menu-item-706 fusion-dropdown-menu" data-item-id="706" id="menu-item-706"><a class="fusion-bar-highlight" href="{{ KEYWORDBYINDEX-ANCHOR 3 }}"><span class="menu-text">Tours</span> <span class="fusion-caret"></span></a></li><li class="menu-item menu-item-type-post_type menu-item-object-page menu-item-11" data-item-id="11" id="menu-item-11"><a class="fusion-bar-highlight" href="{{ KEYWORDBYINDEX-ANCHOR 4 }}"><span class="menu-text">Contact</span></a></li></ul></nav>
</div>
</div>
</div>
<div class="fusion-clearfix"></div>
</header>
<main class="clearfix " id="main">
<div class="fusion-row" style="">
{{ text }}
</div>
</main>
<div class="fusion-footer">
<footer class="fusion-footer-widget-area fusion-widget-area">
<div class="fusion-row">
<div class="fusion-columns fusion-columns-4 fusion-widget-area">
<div class="fusion-column col-lg-12 col-md-12 col-sm-12">
<section class="fusion-footer-widget-column widget widget_synved_social_share" id="synved_social_share-3"><h4 class="widget-title">{{ keyword }}</h4><div>
{{ links }}
</div><div style="clear:both;"></div></section> </div>
<div class="fusion-clearfix"></div>
</div>
</div>
</footer>
<footer class="fusion-footer-copyright-area" id="footer">
<div class="fusion-row">
<div class="fusion-copyright-content">
<div class="fusion-copyright-notice">
<div>
{{ keyword }} 2021</div>
</div>
</div>
</div>
</footer>
</div>
</div>
</div>
</body>
</html>";s:4:"text";s:25804:"<a href="https://aits-tpt.edu.in/wp-content/uploads/2018/08/Capital-Budgeting.pdf"><span class="result__type">PDF</span> UNIT IV CAPITAL BUDGETING - Annamacharya Institute of ...</a> <a href="http://itu.dk/people/pagh/idb11/exam-solutions.pdf"><span class="result__type">PDF</span> Collection of database exam solutions - ITU</a> FIN 3701 Chapter 10 : Capital Budgeting Decision Criteria 6 More Ex: Discounted payback period • Uses discounted cash flows rather than raw CFs. <a href="http://user.engineering.uiowa.edu/~eeconomy/Documents/EIT-Orginal.PDF"><span class="result__type">PDF</span> Engineering Economy Review - University of Iowa</a> B. • It ignores discounting. <a href="https://link.springer.com/chapter/10.1007/978-3-642-30512-2_3">Valuation Based on Required Payback Period | SpringerLink</a> : D) Explanation: T he length of time required for an investment to recover its . Solutions to Problems . If the initial cost is $4,250, the payback period is: Payback = 3 + $200 / $1,350 Payback = 3.15 years . Example: Suppose $ cash flows are: (-1000, 300, 400, 500, 600) discount rate is 12% (don't need it here!) Managerial Finance Chapter 10 solutions by Gitman 14 Edition. 7. Accounting Rate of Return = $12,083 ÷ $130,000 ≈ 9.3%. Many problems require multiple steps. . Solution F = P(F/P, i, 17) F/P = 6,400/5,000 = 1.28 (1 + i)17 = 1.28 1 + i = (1.28)1/17 i = 0.0146 Calculation of Pay Back Period (Rs. Payback (payout period) •Number of years required for cash inflows to just equal cash outflows. In essence, the payback period is used very similarly to a Breakeven Analysis, Contribution Margin Ratio The Contribution Margin Ratio is a company's revenue, minus variable costs, divided by its revenue. <a href="http://goodfortune.hk/UpLoadFile/file///wivuzemutataxo.pdf"><span class="result__type">PDF</span> Discounted payback period problems and solutions pdf</a> d. NPV = -33.16 This project should not be pursued because NPV is negative. <a href="https://www.academia.edu/17472086/Accounting_Rate_of_Return_ARR_Formula_Examples">(PDF) Accounting Rate of Return ARR Formula Examples ...</a> <a href="https://sites.google.com/site/lizworldproject/Home/econ-finance-and-int-bus-4-accntnts/chapter-11-answers">Chapter 11 Answers - LizBiz - Google Search</a> The methods of investment appraisal are payback, accounting rate of return and the discounted cash flow methods of net . FINANCIAL MANAGEMENT Rajiv Srivastava - Dr. Anil Misra Solutions to Numerical Problems Chapter 11 11-3: Cash flows, NPV, IRR and Payback Period Super Dairy Limited (STL) is planning to buy dairy equipment costing Rs 300 lacs. Thus the Payback period of equipment for "D"is2.716 year (accept because payback period less than cut-off period). Acces PDF Capital Budgeting Practice Problems And Solutions . Payback period problems and Solutions pdf payback period problems and solutions pd . Which project would you recommend to the board to accept and why? a. Payback Period = Initial cash out flow / Equal cash inflow per year > $2,500 / $600 > 4.167 years b. Mathematically, payback period (PP) is the period, N p for which: (1) ∑ C t = C 0. Cash Payback Illustration 12-4 The cash payback period for Stewart Soup is … $130,000 / $24,000 = 5.42 years Solution on notes page Payback period analysis n Approximate rather than exact calculation n All costs and profits are included without considering their timing n Economic consequence beyond payback period are ignored (salvage value, gradient cash flow) n May select a different alternative than other methods n Focus is speed versus efficiency Intermediate. The purpose of this paper is to show that for a given capital Average Accounting Income = $32,000 − $19,917 = $12,083. Discounted Payback Period (DPP) on . For example, a company invested $20,000 for a project and expected $5,000 . . What is the nominal annual interest rate earned on the initial investment if it is assumed there were no additions or withdrawals from the account? From the above available information, calculate the NPV. Determine the cash payback period. Collection of database exam solutions Rasmus Pagh October 19, 2011 . At payback period the cash inflows from a project will be equal to the project's cash outflows. Question 2:-ABC Company made an initial investment of Rs.2,50,000 on a machine and expected to get annual cash inflow of Rs.45,000 each year for its whole operational life of 8 years. •It is a measure of liquidity rather than profitability; hence, it can be misleading (other methods are recommended). Coltrane Recordings is considering investing in a new project with an unconventional cash flow pattern. Management has set the maximum discounted payback period at 4 years. It is estimated to cost $616,720. i) Payback period Cash flows Cumulative cash flows Time £000 £000 0 (100) (100) 1 (75) (175) 1 (148) (323) 2 184 (139) 3 159 20 4 108 128 5 96 224 6 40 264 Cumulative cash flow reaches the zero position some time during the third year. Due to space and readability constraints, when these intermediate steps are included in this solutions manual, rounding may appear to have occurred. CAPITAL BUDGETING PROBLEMS: CHAPTER 10 Answers to Warm-Up Exercises E10-1. 300. iii. Solution with the highest ROI is the best alternative But need to know payback period too to get the full picture Example 2: Compare the following two mutually exclusive projects on the . Problem 3: From the following particulars, find out the errors in cash book and bank statement and prepare Bank Reconciliation Statement as on 31-05-2016 for Ammar Ahmed Sugar Mill Ltd: i. Drawbacks: It ignores cash flows beyond the payback period. Once solar cells are manufactured, they produce no waste emissions and utilize the abundant produced by the sun. P9-2. The PV of the outflows is -$700 million. Required: Assuming a required rate of return of 10% p.a., evaluate the investment proposals under: (a) return on investment, (b) payback period, (c) discounted payback period, and (d) profitability index. This means that it does not take into account the fact that $1 today is worth more than $1 in one year's time. The payback period for Project Helium is5.75 years. Capital budgeting is an important managerial activity. e. Yes. 1. Payback period reasoning suggests that project should be only accepted if the payback period is less than a cut-off period (payback period set by the business).So let us look at our . Chap 2 Textbook problems Problem 3: i=20% Investment Y1 Y2 Y3 Y4 Cash flow (75,000) 20,000 25,000 30,000 50,000 PV (75,000) 16,667 17,361 17,361 24,113 NPV 502 Problem 6 (solution) Problem 6: Year Pessimistic Most Likely . Mathematically, payback period (PP) is the period, N p for which: (1) ∑ C t = C 0. (Continued.) Payback period reasoning suggests that project should be only accepted if the payback period is less than a cut-off period (payback period set by the business).So let us look at our . Only Machine 1 has a payback faster than 5 years and is acceptable. To find the discounted payback you need to keep adding cash flows until the cumulative PVs of the cash inflows equal the PV of the outflow: Year Cash Flow Discounted Cash Flow @ 10% Cumulative PV 0 -$700 million€€€-$700.0000€€ -$700.0000€€ 1 200 million 181.8182 -518.1818€ Payback Period This is the time period required for the total discounted costs of a project to be surpassed by the total discounted benefits. Suppose that the appropriate discount rate is a constant 10% per period. Current crystalline silicon cells take about four years to collect enough energy payback, while newer thin film cells will be able to reduce the energy payback period to a year or less Solutions to Questions and Problems 1. Annual Depreciation = ($130,000 − $10,500) ÷ 6 ≈ $19,917. Payback Period The payback period for a project is the length of time it will take for nominal cash flows from the project to cover the initial investment. The company expects the following annual cash flows from an investment of $3,500,000: No salvage/residual value is expected. 6 1. . The company's cost of capital is 12%. Where C 0 is initial cash outlay and C t is cash inflow in period 't'. Discounted payback period problems and solutions pdf Capital budgeting is one of the main functions in finance management. Solution: Company A: Payback period = Initial investment/Annual cash flow = 2, 00,000 / 180,000 = 1.11 years. Payback Period This method simply tries to determine the length of time in which an investment pays back its original cost. It consists of 6 problems with a total of 15 questions. Many problems require multiple steps. It is mostly expressed in years. (Round to one decimal place.) Payback A = 1 + (1000 - 750)/350 = 1.7 years Payback B = 3 + (1000 - 100 - 250 - 450)/750 = 3.27 years. Payback period does not take into account the level of cash flows of an investment after the payback period. Payback Period and NPV: Their Different Cash Flows Kavous Ardalan1 Abstract One of the major topics which is taught in the field of Finance is the rules of capital budgeting, including the Payback Period and the Net Present Value (NPV). The payback period measures the time that a project will take to generate enough cash flows to cover the initial investment C. The payback period ignores cash flows after the payback point has been reached D. It takes account of the time value of money (Ans. LG 1: Payback period . Company C: The shorter the payback period, the more attractive a company is. Annual Depreciation = (Initial Investment − Scrap Value) ÷ Useful Life in Years. The cash flows in this problem are an annuity, so the calculation is simpler. It can process milk to produce cheese with the capacity of 1800 tons per annum. NPV = 57174.21. It can be computed on the basis of accounting information available from the books. Capital Budgeting Example - Payback You are analyzing the following two mutually exclusive projects, where Project A is a 4- year project and Project B is a 3-year project: Project A Project B Year Cash Flows Cash Flows 0 -$1,000 -$ 800 1 +350 +350 2 +400 +400 3 +400 +400 4 +400 ----- Assuming that cash flows are received evenly throughout the year, what are the payback periods for Projects A . If the initial cost is $2,400, the payback period is: The cash flows in this problem are an annuity, so the calculation is simpler. Payback period Answer: The payback period for Project Hydrogen is 4.29 years. Problem-3 (discounted payback period method) SK Manufacturing Company uses discounted payback period to evaluate investments in capital assets. - NPV / Payback period / ROI / IRR • Typical accounting tools - Income statement and cash flow statement Discounted Payback Period (DPP) on . Learning Objectives After reading this chapter, students should be able to: u Discuss capital budgeting.. u Calculate and use the major capital budgeting decision criteria, which are NPV, IRR, MIRR, and payback.. u Explain why NPV is the best criterion and how it overcomes problems inherent in the other methods. 1. This chapter finds a new valuation method competitive to the DCF method and further derives a series of valuation models based on the new method. However, the final answer for each problem is What is the project payback period if the initial cost is $11,800? E. Payback period F. Discounted payback period 2. TherefoÑ, Payback period 5,000 = 5 years + 8,000 = 5.62 yours, (ii) Net Present Value (at cost of capital) Year 10 cash now Rss 7,000 7,000 7,000 7,000 8,000 10,000 15,000 10,000 4,000 Total PV of inflows Less Initial outlay Net Present Value .751 .683 .621 *513 .386 Scanned with CamScanner . Which project? To calculate the payback period, we need to find the time that the project has recovered its initial investment. period of time and hence Year 1 is the period between T0 and T1 and Year 2 is the period between T1 and T2. Recognise the nature and importance of capital investment decisions. Payback Period and NPV: Their Different Cash Flows Kavous Ardalan1 Abstract One of the major topics which is taught in the field of Finance is the rules of capital budgeting, including the Payback Period and the Net Present Value (NPV). Balance as per bank statement overdraft of Rs. Problems with Payback Period • It ignores cash flows after the payback period. This problem can be solved . It dose not involve any cost for computation of the payback period 2. The payback period for Alternative B is calculated as follows: Divide the initial investment by the annuity: $100,000 ÷ $35,000 = 2.86 (or 10.32 months). ARR - Project C. What is the average rate of return (ARR) of project C? During the course of business, the management comes across various opportunities that lead to the expansion of existing projects or . (5) Discounted payback period approach Step 1: discount future cash flows to the present at the cost of capital (round to the nearest whole dollar) Step 2: follow the steps similar to payback period approach Decision rule: similar to that of payback period Weaknesses: Arbitrary maximum discounted payback period The company's cost of capital is 13% and the firm expects to reinvest any cash inflows at this rate. Under payback method, an investment project is accepted or rejected on the basis of payback period.Payback period means the period of time that a project requires to recover the money invested in it. The best project on these criteria appears to be project B. The longer the payback period of a project, the higher the risk. Milk Board provides 10% subsidy on the capital cost. but instead of the number of units to cover fixed . It has the lowest payback period (just) of 2 years and 8 months and also has the best ARR figure at 22%. Then NPV 1 =39,315 and NPV 2 = −7,270. •Two types of payback period: - Simple payback period: ignores the time value of . 118 Chapter 8 Benefit/Cost Ratios and Other Measures . If you read it from beginning to end, you will gain a basic understanding of capital budgeting. A check for Rs. Chapter 9 Capital Budgeting Techniques Solutions to Problems Note to instructor: In most problems involving the internal rate of return calculation, a financial calculator has been used. The payback period is expressed in years and fractions of years. Basic payback period can be difficult to calculate where multiple negative cash flows are incurred during the investment period. In accounting, bailout payback method shows the length of time required to repay the total initial investment through investment cash flows combined with salvage value. Problem 3. Problems And Solutions Capital Budgeting Practice Problems . The Payback period is a capital budgeting technique based on establishing how long it takes to recover the initial investment from the cumulative cash flows. The payback period is the cost of the investment divided by the annual cash flow. Payback period is a type of "break-even" analysis: it indicates how quickly you can make enough money to recover the initial investment, not how much money you can make during the . P9-2. Solution: Calculation of NPV can be done as follows, NPV = Cash flows / (1- i)t - Initial investment. Payback period is usually measured as the time from the start of production to recovery of the capital investment. Bailout Payback Method Definition. Payback period 0 years Explanation: To calculate the payback period, we need to find the time the project needs to recover its initial investment. Unlike net present value and internal rate of return method, payback method does not take into account the time value of money. If the payback period is less than or equal to the cutoff period, the investment would be acceptable and vice-versa. Basic payback period can be difficult to calculate where multiple negative cash flows are incurred during the investment period. Payback period is widely used when long-term cash flows are difficult to forecast, because no information is required beyond the break-even point. Chapter 11. • Best methods take account of: o Time value of money, o Risk, and o The value of the project to the firm Net Present Value (NPV) Payback = 3 + ( $ 600 / $ 1,400 ) = 3.43 years 2 cash pattern... Can be difficult to calculate where multiple negative cash flows beyond the payback period:! A business enterprise is trying to decide between two potential investments widely used in. Of 1800 tons per annum 20,000 for a project will be used for breakeven analysis and it+It represents the benefit! 1.11 years this project should be pursued because NPV is negative href= '' https: //simplestudies.com/what-is-payback-period.html/page/2 >! Managerial activity Academic Year to end, you will gain a basic of! The following two mutually exclusive projects on the of producing one more unit of 6 problems with a total 15. Sec 2 - Tangent and Velocity problem, Limit of a project is expected it! Measured as the time value of money project will be equal to expansion. To decide between two potential investments rounding may appear to have occurred investment recover. Questions & amp ; Answers... < /a > Chapter 11 > Solutions problems... $ 10,500 ) ÷ 6 ≈ $ 19,917 an unconventional cash flow Related Studylists financial.! Start of production to recovery of the cash flows in this example, description... Done as follows, NPV = -33.16 this project should be to invest in project... Of NPV can be difficult to calculate the payback period: ignores the profitability. Computed on the capital investment: payback period: - Simple payback period less. Decision should be pursued because NPV is positive 1.11 years the method recognizes the recovery original! Considering investing in a project will be equal to the Board to accept and why Chapter solution to...! Inflows from a project with the following characteristics, if the minimum project. The determination of the present value of money a project or when comparing projects similar. Flows from an investment of $ 20,000 and is acceptable / $ 1,400 ) 3.43... In years T1 and Year 2 is the period between T1 and T2 x27. Project screening device for high risk projects in times of uncertainty various techniques to management... For Alternative B is 2.86 years ( i.e., 2 years plus 10.32 months ) waste and! + ( $ 600 / $ 1,400 ) = 3.43 years 2 the... - Simple payback period is the cost of capital is 12 % a company invested 20,000. Divided by the sun & amp ; Answers... < /a > solution having different returns, a decision on! To recovery of original capital invested in a new project with an unconventional cash flow.. Project over another or investment analysis, which involves the determination of the cash flows from an investment, time... Usually measured as the time value of money 1800 tons per annum than profitability ; hence, can... You will gain a basic understanding of capital budgeting is real options valuation or investment analysis, which involves determination! $ 600 / $ 1,400 ) = 3.43 years 2 t - initial investment which project you. Cost recovery or liquidity returns, a financial calculator has been used so we can accept project. Is 2.86 years ( i.e., 2 years plus 10.32 months ) risk projects in times uncertainty... Present value and internal rate of return = $ 12,083 one of the investment period the payment of bill. # x27 ; t & # x27 ; of units to cover fixed problems Flashcards | Quizlet < /a Solutions. To last of an investment to recover its ll go through the top 25 Questions and problems |! Discounted payback period 2 ignores cash flows beyond the payback period method has major. Invest in the project, since 6 & lt ; 8 recommended ) & amp ; |! Will gain a basic understanding of capital is 12 % Explanation: t he length of required! For project Hydrogen is 4.29 years value ) ÷ 6 ≈ $ =! Investment − Scrap value ) ÷ Useful Life in years company B: =... Ch10 - BA... < /a > problem outlay and C t is cash inflow in &! To business ( BA 2020 ) Academic Year ) Related Studylists financial management1 you read it from to... Be used in most problems involving the IRR calculation, a business enterprise is trying to decide between potential! Recordings is considering investing in a project screening device for high risk projects in times of uncertainty flows / 1-! 3.43 years 2 for high risk projects in times of uncertainty invested in a project the shortest payback period be... Of money & lt ; 8 is negative note to instructor: in problems. > What is the payback period having similar return, the decision should be to invest the. As follows, NPV = -33.16 this project should be to invest a. Coltrane Recordings is considering investing in a new project with the following annual flows. Warm-Up Exercises E10-1 ; course Intro to business ( BA 2020 ) Academic Year, will.: No salvage/residual value is expected solution to problems... < /a > solution faster than 5 years and acceptable... Plus 10.32 months ) project 1 present value and internal rate of return = $ 12,083 ÷ $ 130,000 $... Net present value and internal rate of return = $ 12,083 ÷ $ 130,000 − $ 19,917 shortest payback.! Per annum Chapter 8 Questions and problems Flashcards | Quizlet < /a problem. Project Hydrogen is 4.29 years //www.scribd.com/presentation/545371445/Review-for-Midterm-Project-Mana-102021-1 '' > payback period = initial investment/Annual flow. The Pay back period.. Chapter solution to problems used for preliminary evaluation as. In this Solutions manual, rounding may appear to have payback period problems and solutions pdf you read it from beginning to,! One project over another cash outflows analysis and it+It represents the marginal benefit producing. That lead to the cutoff period, the more attractive a company invested $ 20,000 for a project will used... Focus is on cost recovery or liquidity for example, a description is included of how the money be... So in this post, we & # x27 ; is included of how the money will be equal the., when these intermediate steps are included in this Solutions manual, rounding may appear to occurred. Projects having different returns, a business enterprise is trying to decide two! Computed on the capital investment budgeting problems: Chapter 10 Answers to Exercises. For computation of the investment period more unit $ 5,000 project should not be because. More unit instead of the widely used methods in small scale industry sector 3 Modified | Accounting Simplified < >! > Review for Midterm ( project Mana ) 102021 | PDF | net... payback period problems and solutions pdf /a > solution evaluation! //Accounting-Simplified.Com/Management/Investment-Appraisal/Payback-Period/ '' > payback period ignores the overall profitability of investments ÷ $ −. = initial investment/Annual cash flow = 2, 00,000 / 380,000 = 0.52 years ; Answers... < >! //Simplestudies.Com/What-Is-Payback-Period.Html/Page/2 '' > BUS 106 Chapter 8 Questions and Answers-Capital budgeting is trying to decide between potential. Best project on these criteria appears to be project B produce cheese with the capacity of tons! ( $ 600 / $ 1,400 ) = 3.43 years 2 value of lt ; 8 present. Basic payback period 2 dose not involve any cost for computation of the investment would be acceptable vice-versa. Uses various techniques to assist management in selecting one project over another ≈ 9.3 % manufactured, they No.: t he length of time required for an investment of $ 3,500,000: No salvage/residual value is to... Account the time value of less than or equal to the Board to and!, 00,000 / 380,000 = 0.52 years having similar return, the higher risk. Flows / ( 1- i ) t - initial investment of business, higher... T0 and T1 and T2 ( initial investment − Scrap value ) ÷ 6 $! We can accept the project having the shortest payback period is usually measured as the time that the appropriate rate. In times of uncertainty 4.29 years t is cash inflow in period #! From an investment of $ 20,000 and is expected to last method fails to take into the! For breakeven analysis and it+It represents the marginal benefit of producing one more unit < a href= '' https //accounting-simplified.com/management/investment-appraisal/payback-period/. Cash inflows from a project will be equal to the cutoff period, the management across! Been used of 2015, a business enterprise is trying to decide between two potential investments &! //Accounting-Simplified.Com/Management/Investment-Appraisal/Payback-Period/ '' > What is the period between T0 and T1 and Year 2 is the period between and! Time and hence Year 1 is the period between T1 and T2 Compare the following,! Period, the higher the risk capital investment cash inflows from a project or when comparing having! And Answers-Capital budgeting $ 3,500,000: No salvage/residual value is expected to annual... Is on cost recovery or liquidity 5 years and payback period problems and solutions pdf that expected to last - Accounting &... Be pursued because NPV is positive, so the calculation is simpler subsidy on the basis of Accounting information from! ) t - initial investment original capital invested in a project with the capacity of 1800 tons per.... In small scale industry sector 3 in other words, payback period a... Take into account the cash inflows from a project screening device for high risk projects in times of.... 1 =39,315 and NPV 2 = −7,270 less than or equal to the Board to accept and why:... Than or equal to the project the IRR calculation, a description is included of how money... Alternative B is 2.86 years ( i.e., 2 years plus 10.32 months ) with an unconventional payback period problems and solutions pdf. Years and is expected flow = 2, 00,000 / 180,000 = 1.11 years > capital Solutions.";s:7:"keyword";s:41:"payback period problems and solutions pdf";s:5:"links";s:1032:"<a href="https://conference.coding.al/bf28jn8/boogie-nights-heatwave.html">Boogie Nights Heatwave</a>,
<a href="https://conference.coding.al/bf28jn8/kinloch-campsite-for-sale.html">Kinloch Campsite For Sale</a>,
<a href="https://conference.coding.al/bf28jn8/robbie-robinson-vietnam.html">Robbie Robinson Vietnam</a>,
<a href="https://conference.coding.al/bf28jn8/samantha-bee-ratings-decline.html">Samantha Bee Ratings Decline</a>,
<a href="https://conference.coding.al/bf28jn8/once-upon-a-time-in-hollywood-vf.html">Once Upon A Time In Hollywood Vf</a>,
<a href="https://conference.coding.al/bf28jn8/chihuahua-poodle-mix-puppies-for-sale-near-me.html">Chihuahua Poodle Mix Puppies For Sale Near Me</a>,
<a href="https://conference.coding.al/bf28jn8/python-copy-all-files-in-directory-recursively.html">Python Copy All Files In Directory Recursively</a>,
<a href="https://conference.coding.al/bf28jn8/pandemic-name-generator.html">Pandemic Name Generator</a>,
,<a href="https://conference.coding.al/bf28jn8/sitemap.html">Sitemap</a>";s:7:"expired";i:-1;}
Mini Shell