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The following questions are based on the material in Chapter 11: Q17. You have been presented with following data for Project A: Project A Year
The following questions are based on the material in Chapter 11: Q17. You have been presented with following data for Project A: Project A Year Details $ 0 Cost 300,000 Net Cash Flow After Tax 40,000 2 Net Cash Flow After Tax 60,000 W Net Cash Flow After Tax 80.000 Net Cash Flow After Tax 100,000 5 Net Cash Flow After Tax 120,000 Required: ( a ) Calculate the Payback Period. (Show your workings). Payback Period - Project A Year Cash Inflow $ Cumulative Cash Inflow $ 40,000 40,000 2 60,000 100,000 3 80,000 180,000 4 100,000 280,000 5 120,000 400,000 Payback Period calculation (in years and months): 300,000 - 280,000 / 120,000 = 0.166 0. 166 x 12 months = 2 months (rounded)
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