Suppose a company had an initial investment of $50,000. The cash flow for the next five...

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Suppose a company had an initial investment of $50,000. The cash flow for the next five years are $11,000, $15,000, $10,000,

business finance

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Answer 1

Answer #1

rate positively ..

year	Cash flow	Cumulative cash flow
0	-50000	-50000
1	11000	-39000
2	15000	-24000
3	10000	-14000
4	10000	-4000
5	12000	8000


Payback period is the period at which cumulative cash flow is zero
therefore payback period =	4+4000/12000
		4.33	year

ans =		4.33	year

If the projected payback period is less than 4 year project should not be accepted

Ans =	NO

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Answer 2

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