Homework Answers
rate positively ..
| Ans 1 | Based on the payback period we can compute the initial investment | |||||
| Investment = | 925000 | |||||
| 275000+450000+400000*0.5 | ||||||
| Computation of NPV | ||||||
| year | Cash flow | PVIF @ 9% | Present value | |||
| 0 | -925000 | 1.0000 | (925,000) | |||
| 1 | 275000 | 0.9174 | 252,294 | |||
| 2 | 450000 | 0.8417 | 378,756 | |||
| 3 | 400000 | 0.7722 | 308,873 | |||
| 4 | 400000 | 0.7084 | 283,370 | |||
| 298,293 | ||||||
| Ans = | 298,293 | |||||
| Ans 2 | Correct answer is option = | |||||
| The payback period does not take the project's entire life into account | ||||||
| the payback period does not take the time value of money into account | ||||||
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