Question
1. Payback period . Given the cashflow of four projects, A, B, C, and D, and using the payback period decision model, which projects do
1. Payback period. Given the cashflow of four projects, A, B, C, and D, and using the payback period decision model, which projects do you accept and which projects do you reject with a three-year cutoff period for recapturing the initial cash outflow? for payback period calculations, assume that the cash flow is equally distributed over the year.
| Cash Flow | A | B | C | D |
| Cost | $10,000.00 | $25,000.00 | $45,000.00 | $100,000.00 |
| Cash flow year 1 | $4,000.00 | $2,000.00 | $10,000.00 | $40,000.00 |
| Cash flow year 2 | $4,000.00 | $8,000.00 | $15,000.00 | $30,000.00 |
| Cash flow year 3 | $4,000.00 | $14,000.00 | $20,000.00 | $20,000.00 |
| Cash flow year 4 | $4,000.00 | $20,000.00 | $20,000.00 | $10,000.00 |
| Cash flow year 5 | $4,000.00 | $26,000.00 | $15,000.00 | |
| Cash flow year 6 | $4,000.00 | $32,000.00 | $10,000.00 |
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ISE Financial Markets And Institutions
Authors: Anthony Saunders, Marcia Cornett, Otgo Erhemjamts
8th International Edition
1265561435, 9781265561437
