Question

hello, im having trouble understanding the process for this problem. The correct answer is D but im not sure how we arrived to that answer or where those numbers even came from. Can someone explain it to me and show the process? thanks! also, please ignore charts written on the right side of the paper thats not part of the problem/solution.

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Bonus. (1 pt.) What is the payback period of the following assuming that there's no time value of money! (0% interest). Period Cash flow -300,000 50,000 58,000 43,000 39,000 38,000 42,000 40.000 38,500 Ceraile rubric cevau AWN Setup 6.50 6.25 6.00 6.75 d) Calarlation Dearson 6=270000 n = 30000 o 72310000 n-6 = 300000 - 270000 1-6 310000 - 270000 n = (6-75

Answer 1

First, find cumulative cash flow values as below: Year 1 2 CF -300000 50000 58000 43000 39000 38000 42000 40000 38500 Cumulative CF -300000 -250000 -192000 -149000 -110000 -72000 -30000 10000 48500 6 8 Formula to be used: Payback period = Year having last negative cumulative CF value + (Cumulative CF/Net CF for one period later) Payback period = 6+ (30000/40000) Payback period = 6.75 years