Homework Answers
a) Cash payback period
| Year | Cash flow | Cumulative cash flow |
| 1 | 32000 | 32000 |
| 2 | 25000 | 57000 |
| 3 | 21000 | 78000 |
| 4 | 21000 | 99000 |
| 5 | 21000 | 120000 |
| 6 | 21000 | 141000 |
| 7 | 21000 | 162000 |
| 8 | 21000 | 183000 |
| 9 | 21000 | 204000 |
So answer is d) 9 Years
2) Net income = 140000-(400000-25000/5) = 65000
Accounting rate of return = 65000/400000 = 16.25%
So answer is b) 16.25%
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