a | Payback period = Initial cost / Annual cash flow = 5,000 / 1,800 = 2.78 years |
b | Payback period = Year before total exceeds 5000 + fraction of year to reach 5000 = 3 + 1,300 / 2,500 = 3.52 years |
c | Annual cash flow = (1,500 X 75%) + 1,000 = 2,125 Payback period = 5,000 / 2,125 = 2.35 years |
d | Annual cash flow = (1,600 X 75%) + 900 = 2,100 Accounting profit = (4,000 - 1,500 - (4,500 / 5)) X (1 - 25%) = 1,200 (1) ARR = 1,200 / 5,000 = 24% (2) ARR = 1,200 / (5,000 + 500) / 2 = 43.64% |
e1
0 | -5,000 | 1.00 | -5,000 |
1 | 1,800 | 0.93 | 1,667 |
2 | 1,800 | 0.86 | 1,543 |
3 | 1,800 | 0.79 | 1,429 |
4 | 1,800 | 0.74 | 1,323 |
5 | 1,800 | 0.68 | 1,225 |
2,187 |
e2
0 | -5,000 | 1.00 | -5,000 |
1 | 500 | 0.93 | 463 |
2 | 1,200 | 0.86 | 1,029 |
3 | 2,000 | 0.79 | 1,588 |
4 | 2,500 | 0.74 | 1,838 |
5 | 2,000 | 0.68 | 1,361 |
1,278 |
e3
0 | -5,000 | 1.00 | -5,000 |
1 | 2,125 | 0.93 | 1,968 |
2 | 2,125 | 0.86 | 1,822 |
3 | 2,125 | 0.79 | 1,687 |
4 | 2,125 | 0.74 | 1,562 |
5 | 2,125 | 0.68 | 1,446 |
3,485 |
e4
0 | -5,000 | 1.00 | -5,000 |
1 | 2,100 | 0.93 | 1,944 |
2 | 2,100 | 0.86 | 1,800 |
3 | 2,100 | 0.79 | 1,667 |
4 | 2,100 | 0.74 | 1,544 |
5 | 2,100 | 0.68 | 1,429 |
3,385 |
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