Mundall Company is considering a project that will require an initial investment of $600,000 and is expected to generate the following cash flows:

A. What is the project's payback period?
B. If the required rate of return is 20% and taxes are ignored, what is the project's net present value? The present value of $1 at compound interest of 20% for 1, 2, 3, 4 and 5 years is .8333, .6944, .5787, .4823 and .4019, respectively.

Question

Mundall Company is considering a project that will require an initial investment of $600,000 and is expected to generate the following cash flows:
  
A. What is the project's payback period?
B. If the required rate of return is 20% and taxes are ignored, what is the project's net present value? The present value of $1 at compound interest of 20% for 1, 2, 3, 4 and 5 years is .8333, .6944, .5787, .4823 and .4019, respectively.

Quizplus · Accepted Answer

The Answer of Mundall Company is considering a project that will require an initial investment of $600,000 and is expected to generate the following cash flows:
  
A. What is the project's payback period?
B. If the required rate of return is 20% and taxes are ignored, what is the project's net present value? The present value of $1 at compound interest of 20% for 1, 2, 3, 4 and 5 years is .8333, .6944, .5787, .4823 and .4019, respectively.

Mundall Company Is Considering a Project That Will Require an Initial