Payback period The Ball Shoe Company is considering an investment project that requires an initial investment...
Payback period The Ball Shoe Company is considering an investment project that requires an initial investment of $534,000 and returns after-tax cash inflows of $90,514 per year for 10 years. The firm has a maximum acceptable payback period of 8 years.
a. Determine the payback period for this project.
b. Should the company accept the project?
Homework Answers
![Payback = investment + annual cash flows 5.90 YEARS ( 534000 - 90514] The company should accept the project since the payback](http://img.homeworklib.com/questions/3022a590-3fff-11ea-8f53-11b4829578b7.png?x-oss-process=image/resize,w_560)
5+ (534000-90514*5)/90514 = 5.899
the company should accept the project since 5.89<8
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