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Can you explain how they got the answers for 10-8 where did the 2 years come from on the left side of the answer, and
Can you explain how they got the answers for 10-8 where did the 2 years come from on the left side of the answer, and how did they get 2,000/3000 for b)
10-8. = 2 years + $100/$200 = 2.5 years Project A: Payback Period Project B: Payback Period Project C: Payback Period = 2 years + $2,000/$3,000 = 2.67 years 3 years + $1,000/$2,000 = 3.5 years accepted. 10-8. (Payback period calculations) You are considering three independent projects: project A, project B, and project C. Given the following free cash flow information, calculate the payback period for each. 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 3 200 3,000 2,000 Inflow year 4 3,000 2,000 Inflow year 5 3,000 2,000 If you require a 3-year payback before an investment can be accepted, which project(s) would be accepted? 100 500
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