Coca Cola is evaluating an investment in a new syrup production machine. The initial investment in...
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Coca Cola is evaluating an investment in a new syrup production machine. The initial investment in the project is $110,000. It has been estimated that annual cash inflows of $40,000 will be generated by the machine for the next 5 years. The opportunity cost of the project is estimated to be 6%. Calculate the Payback Period (PB) of the project.
A. 5 years
B. 2.5 years
C. 2.75 years
D. 3.75 years
E. 3.5 years
Homework Answers
Payback period=initial cost/annual cash flows
=110,000/40,000
which is equal to
=2.75 years
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Coca Cola is evaluating an investment in a new syrup production
machine. The initial investment in...
Coca Cola is evaluating an investment in a new syrup production machine. The initial investment in...
Coca Cola is evaluating an investment in a new syrup production machine. The initial investment in the project is $110,000. It has been estimated that annual cash inflows of $40,000 will be generated by the machine for the next 5 years. The opportunity cost of the project is estimated to be 6%. Calculate the Internal Rate of Return (IRR) of the project. A. 6% B. 12.7% C. 23.9% D. 19.6% E. 32.8%
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