Payback period is the time within which cost of project is recovered back. | ||||||
Year | Cash flow | Cumulative cash flow | ||||
0 | $ -1,00,000 | $ -1,00,000 | ||||
1 | 19,000 | -81,000 | ||||
2 | 19,000 | -62,000 | ||||
3 | 9,000 | -53,000 | ||||
4 | 9,000 | -44,000 | ||||
5 | 9,000 | -35,000 | ||||
6 | 9,000 | -26,000 | ||||
7 | 9,000 | -17,000 | ||||
8 | 9,000 | -8,000 | ||||
9 | 9,000 | 1,000 | ||||
Payback period | = | 8+(8000/9000) | ||||
= | 8.89 Years | |||||
Next Page Page 1 of 3 Question 1 (1 point) What is the simple (undiscounted) payback...
Next Page Page 1 of 3 Question 1 (1 point) What is the simple (undiscounted) payback period in years for a $100,000 project with expected cash flows of $19,000 each of the first two years and $9,000 for each year after. Your Answer: Answer
Next Page Page 1 of 3 Question 1 (1 point) What is the simple (undiscounted) payback period in years for a $100,000 project with expected cash flows of $19.000 each of the first two years and $9,000 for each year after. Your Answer: Answer
Question 16 (1 point) What is the simple (undiscounted) payback period in years for a $100,000 project with expected cash flows of $19,000 each of the first two years and $13,000 for each year after Your Answer Answer
Question 1 (1 point) What is the simple (undiscounted) payback period in years for a $100,000 project with expected cash flows of $17,000 each of the first two years and $12,000 for each year after. Your Answer: Answer
What is the simple (undiscounted) payback period in years for a $100,000 project with expected cash flows of $19,000 each of the first two years and $10,000 for each year after.
[Select all relevant.] Deficiencies of the simple (undiscounted) payback period method include: o disregard for cash outflows. Onone of these. Payback is the best capital budgeting method of all. disregard for the time value of money. O an arbitrary cutoff date, with no economic basis. disregard for cash flows after the payback period.
Question 1 (evaluating investment projects) Generic Motors Corporation is planning to invest $100,000 in year zero (today) in new equipment. This investment is expected to generate net cash flows of $40,000 a year for the next 4 years (years 1-4). The salvage value after 4 years is zero. The discount rate (cost of capital) is 20% a year. Required: a) What is the net present value (NPV) of this project? NPV = $ Should the firm invest, based on NPV?...
11. The payback period The payback method helps firms establish and identify a maximum acceptable payback period that helps in capital budgeting decisions. There are two versions of the payback method: the conventional payback method and the discounted payback method Consider the following case: Green Caterpillar Garden Supplies Inc. is a small firm, and several of its managers are worried about how soon the firm will be able to recover its initial investment from Project Omega's expected future cash flows....
11. The payback period The payback method helps firms establish and identify a maximum acceptable payback period that helps in capital budgeting decisions. There are two versions of the payback method: the conventional payback method and the discounted payback method. Consider the following case: Fuzzy Button Clothing Company is a small firm, and several of its managers are worried about how soon the firm will be able to recover its initial investment from Project Alpha's expected future cash flows. To...
5. The payback period The payback method helps firms establish and identify a maximum acceptable payback period that helps in their capital budgeting decisions. Consider the case of Cold Goose Metal Works Inc.: Cold Goose Metal Works Inc. is a small firm, and several of its managers are worried about how soon the firm will be able to recover its initial investment from Project Beta's expected future cash flows. To answer this question, Cold Goose's CFO has asked that you...