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icang [17]
3 years ago
11

Your division is considering two investment projects, each of which require an up-front expenditure of $25 million.

Business
1 answer:
Drupady [299]3 years ago
6 0

Answer:

a.

Project A    2.67 Years

Project B    1.5 Years

b.

Project A    3.07 Years

Project B    1.83 Years

Explanation:

a.

Payback Period

Project A

Year Project A      Balance  Paid Back   years

0            -25              -25              0             0

1             5                  -20              5              1

2            10                 -10              10             1

3            15                   5               10            0.67 (10/15)

4            20                 25              0               0

Total      25                                 25            2.67

2.67 Years

Project B

Year Project A      Balance  Paid Back   years

0          -25               -25             0                0

1            20               -5                20              1

2            10                5                5                0.5 (5/10)

3            8                 13               0                0

4            6                19                0                0

Total      19                                25             1.5

1.5 Years

b.

Working for Discounted Payback is attached with this answer in PDF Format Please Find That.

Download pdf
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