Compute the payback statistic for Project A if the appropriate cost of capital is 8 percent...
Compute the payback statistic for Project A if the appropriate cost of capital is 8 percent and the maximum allowable payback period is four years. (Round your answer to 2 decimal places.)
Project A Time: 0 1 2 3 4 5
Cash flow: –$1,600 $590 $660 $640 $420 $220
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Homework Answers
To calculate the payback period, we need to find the time that the project has recovered its initial investment. After two years, the project has created:
$590 + $660 = $1,250
in cash flows. The project still needs to create another:
$1,600 - $1,250 = $350
in cash flows. During the third year, the cash flows from the project will be $640. So, the payback period will be two years, plus what we still need to make divided by what we will make during the third year. The payback period is:
Payback = 2 + ($350 / $640) = 2.55 years
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Compute the payback statistic for Project A if the appropriate
cost of capital is 8 percent...
Compute the payback statistic for Project A if the appropriate cost of capital is 8 percent...
Compute the payback statistic for Project A if the appropriate cost of capital is 8 percent and the maximum allowable payback period is four years. (Round your answer to 2 decimal places.) Project A Time: Cash flow: -$2,800 $1,070 $1,020 $889 $660 $460 Payback years Should the project be accepted or rejected? accepted rejected
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Compute the payback statistic for Project A if the appropriate cost of capital is 7 percent...
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Compute the payback statistic for Project A if the appropriate cost of capital is 7 percent...
Compute the payback statistic for Project A if the appropriate cost of capital is 7 percent and the maximum allowable payback period is four years. (Round your answer to 2 decimal places.) Project A Time: S Cash flow: o $2,900 1 $1,110 2 $1,050 3 $900 4 $680 5 $480 Payback years
Compute the payback statistic for Project A if the appropriate cost of capital is 7 percent...
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Compute the payback statistic for Project A if the appropriate cost of capital is 7 percent...
Compute the payback statistic for Project A if the appropriate cost of capital is 7 percent and the maximum allowable payback period is four years. (Round your answer to 2 decimal places.) Project A Time: Cash flow: 0 -$2,300 1 $870 2 $870 3 $780 4 $560 5 $360 Payback years Should the project be accepted or rejected? accepted O rejected
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Compute the payback statistic for Project A if the appropriate cost of capital is 8 percent and the maximum allowable payback period is four years. (Round your answer to 2 decimal places.) Project A Time: Cash flow: -$2,800 $1,070 $1,020 $889 $660 $460 Payback years Should the project be accepted or rejected? accepted rejected
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Compute the payback statistic for Project A if the appropriate cost of capital is 7 percent and the maximum allowable payback period is four years. (Round your answer to 2 decimal places.) Project A Time: Cash flow: 0 -$2,300 1 $870 2 $870 3 $780 4 $560 5 $360 Payback years Should the project be accepted or rejected? accepted O rejected
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