The correct concerning the payback rule is rule is flawed because it ignores all cash flows after some arbitrary point in time.
Payback period in capital budgeting refers to the time required to recover funds spent on an investment or to reach breakeven. Example: If at the beginning of year 1 he invests $1,000 and at the end of year 1 and his second year he earns $500, it pays for itself within 2 years.
The number of years it will take to recover the money invested. For example, if it takes 5 years to recover the cost of an investment, the payback period is he 5 years.
Payback period is defined as the number of years required to recover the original cash investment. In other words, the period during which a machine, plant, or other investment has generated sufficient net income to cover its investment costs.
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To calculate the maturity of this note,
we use a simple formula first to get the interest which is:
I = Principal (amount owed) X Interest Rate (%) X Time (length of loan)
The days is only divided by only 360 days instead of 365 days. This is because commercial loans often use 360-day calendar years instead of 365-day calendar years. But not all banks used this as their calendar year,
I = Prt
= ($80000) (0.05) (120/360)
= ($80000) (0.01666666666)
I = $ 1,333.33
To get the maturity value, the formula is: M = Interest + Principal
M = I + P
= $1,333.33 + $80,000
= $81,333.33 or $81,333, letter C
Sora is the best group note taker; she meets are the criteria.
Answer:
Correct option is (B)
Explanation:
Given:
Beginning capital = $80,000
Net income = $35,000
Drawings = $18,000
Net income is added to opening capital and deduct drawings to arrive at capital balance at the end.
Capital at the end of the year = opening capital + net income - drawings
= 80,000 + 35,000 - 18,000
= $97,000
Answer:
Explanation:
In order to find the highest amount david can pay or in other words the present value of the investment we would have to discount the cash flows
3000/1.08+3000/1.08^2+3000/1.08^3+3000/1.08^4+3000/1.08^5=11,978
