PAYBACK PERIOD Each of the following situations is independent. Assume that all cash flows are after-tax cash flows.

a. Emily Hansen has just invested $320,000 in a book and video store. She expects to receive a cash income of $96,000 per year from the investment.

b. Kaylin Day has just invested $700,000 in a new biomedical technology. She expects to receive the following cash flows over the next five years: $175,000, $245,000,

$350,000, $210,000, and $140,000.

c. Kambry Nabors invested in a project that has a payback period of four years. The project brings in $192,000 per year.

d. Kenneth Booth invested $325,000 in a project that pays him an even amount per year for five years. The payback period is 2.5 years.

Required:

. What is the payback period for Emily?

. What is the payback period for Kaylin?

. How much did Kambry invest in the project?

. How much cash does Kenneth receive each year?

Exercise