Payback and ROCE

A project has an average estimated cash flow of $3000 per year with an initial investment of $9000. Depreciation is straight-line with no residual value and the project has a 5-year life span. The company has a target ROCE of 15% and a target payback period of 2.5 years. ROCE should be

• 33%

• 20%

• 13.3%

• 26%

A project has an average estimated cash flow of $3000 per year with an initial investment of $9000. Depreciation is straight-line with no residual value and the project has a 5-year life span. The company has a target ROCE of 15% and a target payback period of 2.5 years. According to the ROCE the company should accept or reject the project?

• Accept

• Reject

A project has an average estimated cash flow of $3000 per year with an initial investment of $9000. Depreciation is straight-line with no residual value and the project has a 5-year life span. The company has a target ROCE of 15% and a target payback period of 2.5 years. The Payback period should be

• 3 Years

• 5 Years

• 7.5 Years

• 2.5 Years

A project has an average estimated cash flow of $3000 per year with an initial investment of $9000. Depreciation is straight-line with no residual value and the project has a 5-year life span. The company has a target ROCE of 15% and a target payback period of 2.5 years. According to the Payback period, the company should accept or reject the project?

• Accept

• Reject

NW Co is considering investing $46000 in a new delivery van that will last for 4. Depreciation is charged on a straight-line basis. Forecasted operating profits/losses are as follows:

year 1 $ 16500 Year 2 $ 23500

Year 3 $ 13500 Year 4 $ 1500

Assuming cash flows arise evenly throughout the year, what is the payback period for the investment?

• 1.7

• 2.7

• 1.5

• 2.44