The project’s hurdle rate is 10%. What is the project’s discounted payback?15 years2.58 years4.09 years3.09 years Pears is considering a project with the following expected cash flows:YearProject Cash Flow- P700 million200 million370 million225 million700 millionO12 34

Solution: initial investment = P700 million Discount rate = 10%

Answered: The project’s hurdle rate is 10%. What…

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The project’s hurdle rate is 10%. What is the project’s discounted payback? 15 years 2.58 years 4.09 years 3.09 years

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 10P

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

The project’s hurdle rate is 10%. What is the project’s discounted payback?

15 years

2.58 years

4.09 years

3.09 years

Pears is considering a project with the following expected cash flows:
Year
Project Cash Flow
- P700 million
200 million
370 million
225 million
700 million
O12 34

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