Question
The Global Logistics Solutions company aims to evaluate its available investments. In particular, there are four different available investments (A-D) with the following information regarding
The Global Logistics Solutions company aims to evaluate its available investments. In particular, there are four different available investments (A-D) with the following information regarding the estimated cash flows:
Year | Investment A | Investment B | Investment C | Investment D |
0 | -70.000,00 | -60.000,00 | -70.000,00 | -70.000,00 |
1 | 25.000,00 | 15.000,00 | 0,00 | 0,00 |
2 | 25.000,00 | 15.000,00 | 0,00 | 0,00 |
3 | 25.000,00 | 15.000,00 | 50.000,00 | 0,00 |
4 | 25.000,00 | 15.000,00 | 50.000,00 | 20.000,00 |
5 | 25.000,00 | 0,00 | 50.000,00 | 140.000,00 |
It is considered that acceptable investment is any investment which has a payback period less than 4 years.
Using this information, you are required to:
- Calculate the Simple Payback period for all the investments. Then you are required to evaluate which of the investments should be considered as acceptable. (15%)
- Rank the investments based on the Simple Payback Method (5%)
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