Suppose your firm is considering investing in a project with the cash flows shown below, that...

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Answer 1

Answer #1

ANS 3.08 YEARS

Year	Project Cash Flows (i)	DF@ 10% (ii)	PV of Project A ( (i) * (ii) )	Cumulative Cash Flow
0	-245000	1	(2,45,000.00)	(2,45,000.00)
1	66800	0.909	60,727.27	(1,84,272.73)
2	85000	0.826	70,247.93	(1,14,024.79)
3	142000	0.751	1,06,686.70	(7,338.09)
4	123000	0.683	84,010.66	76,672.56
5	82200	0.621	51,039.73	1,27,712.30
	NPV		1,27,712.30


Payback Period =	3 years + 7338/84010.66
	3.09 YEARS

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Answer 2

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