Question

1. A firm is starting a new project that will cost $200,000. It is projected to last 5 years and to generate cash flows of $50,000, $70,000, $90,000, $50,000 and $30,000 from Years 1 through 5 respectively. If the discount rate is 10%, what is the payback period of this project? Round to the second decimal place. Type only numbers without any unit ($, %, etc.)

2. A firm is starting a new project that will cost $200,000. It is projected to last 5 years and to generate cash flows of $50,000, $70,000, $90,000, $50,000 and $30,000 from Years 1 through 5 respectively. If the discount rate is 10%, what is the PI of this project? Round to the second decimal place. Type only numbers without any unit ($, %, etc.)

Answer 1

Year 1 Cashflows Cumulative cashflow (200,000.00) $ (200.000.00) $ 50,000.00 $ (150,000.00) 70,000.00 $ (80,000.00) 90,000.00 $ 10,000.00 50,000.00 $ 60,000.00 $ 30,000.00 $ 90,000.00 Payback period 2+80000/90000 2.89 Years - 4 5