Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Rampaga Ltd is a company that is considering two alternative investments: Project A that would cost 100,000 or Project B that would cost 80,000. Both
Rampaga Ltd is a company that is considering two alternative investments: Project A that would cost 100,000 or Project B that would cost 80,000. Both projects would commence on 1 January next year (Year 1'). As a result of the investments, Rampaga Ltd can expect to increase its cash flows over the life of the projects by the following predicted amounts: (click here to view financial information) Calculate the payback period of each investment. Which project should be chosen if they are competing projects? to be repaid from the First, think about how the payback period is defined: Payback period is the time taken for the Now show the cumulative cash flows in this table: (Enter your answers as integers.) More info Project A () Project B () Year Cash inflow 1 41,000 Cumulative cash inflows 41,000 Cash inflow Cumulative cash inflows 47,000 47,000 Year Project A () Project B () 2 26,000 18,000 1 41,000 47,000 3 57,000 53,000 2 26,000 18,000 4 44,000 34,000 3 57,000 53,000 5 44,000 51,000 4 44,000 34,000 5 44,000 51,000 The payback periods represent the time taken to recoup the original investment: (Work to two decimal places.) Project A's investment of 100,000, is repaid in years. Project B's investment of 80,000, is repaid in years. Print Done - x
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored 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