Given the following after-tax cash flow on a new toy for Tyler’s Toys

jagguarpaw January 10, 2017 0 Comments

Question: Comparing all methods. Given the following after-t…

Comparing all methods. Given the following after-tax cash flow on a new toy for Tyler’s Toys, find the project’s payback period, NPV and IRR. The appropriate discount rate for the project is 11%. If the cutoff period is six years for major projects, determine whether management will accept or reject the project under the three different decision models.

Initial cash outflow: $13,900,000

Years 1-4 cash inflow: $3,475,000 each yr.

Year 5 cash outflow: $1,390,000

Year 6-8 cash inflow: $601,333 each year

 

WHAT IS THE PAYBACK PERIOD FOR THE NEW TOY AT TYLER’S Toys?