Question
A capital investment project is estimated to have the following after-tax cash flows: The company utilizes a 8% discount rate for capital project analysis: Year
A capital investment project is estimated to have the following after-tax cash flows:
The company utilizes a 8% discount rate for capital project analysis:
| Year 0 | Year 1 | Year 2 | Year 3 | Year4 |
| ($35,000) | 13,000 | $14,000 | $15,000 | 16,000 |
2.53 is the PAYBACK for the project shown above - show how this figure was arrived at; HOWEVER, the DISCOUNTED PAYBACK is 2.92 so also show how this figure was arrived at; and show how a PROFITABILITY INDEX OF 1.36 was arrived at.
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The Finance Book
Authors: Stuart Warner, Si Hussain
1st Edition
1292123648, 978-1292123646
