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Problem 4. Consider the following series of end of period cash flows Cumulative End of Year Amount 0 1 2 3 4 5 6 CF
| Problem 4. Consider the following series of end of period cash flows | |||||||||||||
| Cumulative | |||||||||||||
| End of Year | Amount | 0 | 1 | 2 | 3 | 4 | 5 | 6 | |||||
| CF (1,000s of $) | 70,000 | -100,000 | 0 | 20,000 | 30,000 | 40,000 | 40,000 | 40,000 | |||||
| A. | Find the payback period without interest (also known as "undiscounted payout" or just plain "payout") | ||||||||||||
| B. | The company can borrow funds at 6% and management requires a profit margin of 4%. | ||||||||||||
| Find the payback period with interest (also known as the "discounted payback period" or "discounted payout") | |||||||||||||
| C. | Plot the results of A and B together in one graph. Use Excel's XY (scatter) plotting feature. | ||||||||||||
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Financial Intelligence For IT Professionals
Authors: Karen Berman, Joe Knight, John Case
1st Edition
1422119149, 9781422119143
