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Q5. A project has an initial cost of $7,400. The cash inflows are $950, $2,300, $3,400 and $4,000 over the next four years, respectively. What
| Q5. A project has an initial cost of $7,400. The cash inflows are $950, $2,300, $3,400 and $4,000 over the next four years, respectively. What is the payback period? | ||||
| HINT: For uneven cash flows accumulate the cash flows for full years then determine the remaining amount needed to achieve the initial investment for the final year. Take the cash flows from the final year and divide by 12 then add back each month until you attain the full investment. State the number of months as a decimal. | ||||
| Initial investment | 7,400 | Cummulative | ||
| Year | 1 | 950 | ||
| Year | 2 | 2,300 | ||
| Year | 3 | 3,400 | ||
| Year | 4 | 4,000 | Calculate the monthly Cash Flow | |
| Payback Calculation | ||||
| Full years | years | |||
| Final Year amt needed | months | |||
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Cost Accounting A Managerial Emphasis
Authors: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan
15th edition
978-0133428858, 133428850, 133428702, 978-0133428704
