Homework Answers
Cash payaback Period calculation:
Reducing capital investment with year 1 and year 2 cash flows
= $23,000 - $3,000 - $8,000
= $12,000
In 3rd $12,000 should be earned but $15,000 is earned.
For earnings $12,000 in 3rd year, time required = $12,000 / $15,000 = 0.8
Cash payback period = 2 + 0.8 = 2.8 years
2nd option
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(Round answer to 2 decimal places, e.g.
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Wayne Company is considering a long-term investment project
called ZIP. ZIP will require an investment of $128,000. It will
have a useful life of 4 years and no salvage value. Annual cash
inflows would increase by $80,000, and annual cash outflows would
increase by $40,300. Compute the cash payback period.
(Round answer to 2 decimal places, e.g.
10.50.)
Cash payback period :
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Three mutually exclusive design alternatives are being considered. The estimated cash flows for each alternative are given. The interest rate is 20% per year. At the conclusion of the useful life, the investment will be sold A C Investment cost $28,000 $55,000 $13,000 $28,000 $8,000 $40,000 Annual expenses Annual revenues $15,000 $23,000 $6,000 10 years $22,000 $32,000 13 $10,000 Salvage value Useful life 10 years 10 years A decision-maker can select one of these alternatives or...
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