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meriva
2 years ago
8

Joe's Hardware is adding a new product line that will require an investment of $ 1,512,000. Managers estimate that this investme

nt will have a​ 10-year life and generate net cash inflows of $ 310,000 the first​ year, $ 270,000 the second​ year, and $ 230,000 each year thereafter for eight years. Compute the payback period. Round to one decimal place.

Business
1 answer:
Sati [7]2 years ago
7 0

Answer:

6.05 years

Explanation:

Payback period is the time in which a project returns back the initial investment in the form of net cash flow. For this purpose we use the net cash flows to calculate the payback.

Payback working is attached with this answer please find it.

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Explanation:

Capital Budgeting defines the future value as present value times the interest rate over the years FV=(1+i)^n, the following table shows both future values for Neighbor’s house and mine to calculate the differences.

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