Answered step by step
Verified Expert Solution
Question
1 Approved Answer
how to solve Q2? someone explaine it to me by details so i can understand Year 4t 340,000 Year 5:530.000 Year 6; $25,000 Required: Compule
how to solve Q2? someone explaine it to me by details so i can understand Year 4t 340,000 Year 5:530.000 Year 6; $25,000 Required: Compule payback period of the investment. Should the investment be made d management wants to recover the initial irvestment in 3 years or less? Solution: (1). Because the cash inflow is uneven, the payback period formula cannot be used to compute the payback period. We can compule the payback period by cornpuling the cumulative net cash fow as follows: Payback period =3+(15,000/40,000) =3+0.375 =3.375 Years The payback period for this project is 3.375 years which is longer than the maximum desired payback period of the management (3 years). The investment in this project is therefore not desirable. a. 0 . 6(2). A company is considering the purchase of a copier trat costs $5,000; Assume a cost of captal of 10 nericent and the following cash flow schedule: Yeat 1=3.000 Vear 2=2.000 Year 3=2.000 What wil be the NPV? Wal you accept the project? Solytion: To determine the NPV, enter the following pV of 83,000 in years =52727, PV o $2000 in year 23 st, 553 , PV et $7,000 in year 3=51,503 NPV =($2,727+51,653+51,509)55,000=893,y=1 accept the priciet bostive NPM 3) A project costs 51 milion and has a present value of fNure cash flows of $1.2 mition. What is its Pn
how to solve Q2? someone explaine it to me by details so i can understand
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