The Pearson Corporation is looking at a potential investment that has the following cash flow data. What is the project's payback? Year (t) and cash flows: (t=0) -$1,300 (t=1) $300 (t=2) $310 (t=3) $320 (t=4) $330 (t=5) $340
The Pearson Corporation is looking at a potential investment that has the following cash flow data. What is the project's payback? Year (t) and cash flows: (t=0) -$1,300 (t=1) $300 (t=2) $310 (t=3) $320 (t=4) $330 (t=5) $340
Related questions
The Blackstone Corporation is considering a project that has the following cash flow and WACC data. What is the projectâs NPV?
WACC: 15.00%
Year (t) and cash flows
(t=0) -$1,200
(t=1) $400
(t=2) $425
(t=3) $450
(t=4) $475
| $36.65 |
| $46.59 |
| $25.84 |
| $62.88 Sublette Mining Company prefers to use the discounted payback method when it considers investing in projects. Given that Sublette's WACC is 10%, find the discounted payback for a project that has the following cash flows:
|
Cummings Products Company is considering two mutually exclusive investments whose expected net cash flows are as follows:
| Year | Project A | Project B |
| 0 | ($690) | ($450) |
| 1 | 300 | 290 |
| 2 | 310 | 290 |
| 3 | 320 | 290 |
| 4 | 330 | 290 |
| 5 | 340 | 290 |
| 6 | 350 | 290 |
| 7 | 360 | 290 |
| 8 | 370 | 290 |
e. What is the crossover rate? SHOW YOUR WORK AND EXPLAIN YOUR ANSWER
Suppose we want to value Asset A with the following future cash flow stream:
| t | 0 | 1 | 2 | 3 |
| A | -Pa | 100 | 150 | 300 |
We also observe the market prices and cash flow streams of Assets B, C, and D:
| t | 0 | 1 | 2 | 3 |
| B | -270 | 300 | ||
| C | -250 | 300 | ||
| D | -100 | 150 |
What is the price of the Asset A according to the arbitrage approach to asset valuation?
Suppose instead that the cash flow streams are as follows:
| t | 0 | 1 | 2 | 3 |
| B | -270 | 300 | ||
| C | -320 | 100 | 300 | |
| D | -370 | 50 | 300 | 150 |
What is the price of Asset A in this case? (Hint: begin the analysis from period 3)
