Question
Assume you invest $500.00 today and let it sit in an investment earning 8% interest for 7 years. How much would you have at the
| Assume you invest $500.00 today and let it sit in an investment earning 8% interest for 7 years. | |||||
| How much would you have at the end of that time? | |||||
| Assume you invest $1,000.00 at the end of every year for 20 years earning 8% interest per year. | |||||
| How much would you have at the end of that time? | |||||
|
| Project A | Project B | Project C | ||
| Initial Outlay | (1,000) | (10,000) | (5,000) | ||
| Inflow Year 1 | 600 | 5,000 | 1,000 | ||
| Inflow Year 2 | 300 | 3,000 | 1,000 | ||
| Inflow Year 3 | 100 | 1,000 | 2,000 | ||
| Inflow Year 4 | 100 | 1,000 | 1,000 | ||
| Inflow Year 5 | 500 | 3,000 | 2,000 | ||
| Calculate the payback for each project. If the company requires a 3 year payback, | |||||
| which project would be accepted? | |||||
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started