A machine costs $5240 and produces benefits of $1000 at the end of each year for eight years Assume continuous compounding and a nominal annual interest rate of 10 (a) What is the payback period (in years) (b) What is the breakeven point (in years) (c) Since the answers in (a) and (b) are different...

a Payback Period At first glance payback would appear to be 5240100 ...

A machine costs $5240 and produces benefits of $1000 at the end of each year for eight

Question:

A machine costs $5240 and produces benefits of $1000 at the end of each year for eight years. Assume continuous and a nominal annual interest rate of 10%.
(a) What is the (in years)?
(b) What is the breakeven point (in years)?
(c) Since the answers in (a) and (b) are different, which one is "correct"?
Compounding
Compounding is the process in which an asset's earnings, from either capital gains or interest, are reinvested to generate additional earnings over time. This growth, calculated using exponential functions, occurs because the investment will... Payback Period
Payback period method is a traditional method/ approach of capital budgeting. It is the simple and widely used quantitative method of Investment evaluation. Payback period is typically used to evaluate projects or investments before undergoing them,...