9-2 The cash flows associated with three different projects are as follows: Gamma ( in...
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9-2 The cash flows associated with three different projects are as follows: Gamma ( in millions) Cash flows Initial outflow Year 1 Year 2 Year 3 Year 4 Beta ($ in millions) Alpha ($ in millions) -0.4 2.0 3.0 2.0 1.5 5.5 0.3 0.2 0.2 0.1 -0.2 0.5 0.4 0.3 Year 5 four-year cut-off period, which projects will it accept? Calculate the payback period of each a investment b Which investments does the company e One of these almost certainly should accept if the cutoff payback period is three years? Four years? If the company invests by choosing projects with the shortest payback period, which project would it invest in? be rejected, but may be accepted if the company uses payback analysis. Which one? c One of these projects almost certainly should be accepted (unless the company's opportunity cost of capital is very high) but may be rejected if the company uses payback analysis. Which one? f If the company uses discounted payback, with a 15% discount rate and a d
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