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mezya [45]
3 years ago
9

You are considering 3 independent projects, project A, project B, and project C. Given the following cash flow information, calc

ulate the payback period for each
Project AProject BProject C
Initial Outlay-1,000-10,000-5,000
Inflow Yr 16005,0001,000
Inflow Yr 23003,0001,000
Inflow Yr 32003,0002,000
Inflow Yr 41003,0002,000
Inflow Yr 55003,0002,000
If you require a 3-year payback before an investment can be accepted, which project(s) would be accepted?

Full Point will be given for work shown
Business
1 answer:
iris [78.8K]3 years ago
6 0

Answer:

Project A should be accepted as it has less payback period

Explanation:

In the payback, we analyze in how many years the invested amount is recovered. The computation is shown below:

For Project A

In year 0 = $1,000

In year 1 = $600

In year 2 = $300

In year 3 = $200

In year 4 = $100

In year 5 = $500

If we sum the first 2 year cash inflows than it would be $900

Now we deduct the $900 from the $1,000 , so the amount would be $100 as if we added the third year cash inflow so the total amount exceed to the initial investment. So, we deduct it

And, the next year cash inflow is $200

So, the payback period equal to

= 2 years + $100 ÷ $200

= 2.5 years

For Project B

In year 0 = $10,000

In year 1 = $5,000

In year 2 = $3,000

In year 3 = $3,000

In year 4 = $3,000

In year 5 = $3,000

If we sum the first 2 year cash inflows than it would be $8,000

Now we deduct the $8,000 from the $10,000 , so the amount would be $2,000 as if we added the third year cash inflow so the total amount exceed to the initial investment. So, we deduct it

And, the next year cash inflow is $3,000

So, the payback period equal to

= 2 years + $2,000 ÷ $3,000

= 2.67 years

For Project C

In year 0 = $5,000

In year 1 = $1,000

In year 2 = $1,000

In year 3 = $2,000

In year 4 = $2,000

In year 5 = $2,000

If we sum the first 3 year cash inflows than it would be $4,000

Now we deduct the $4,000 from the $5,000 , so the amount would be $1,000 as if we added the fourth year cash inflow so the total amount exceed to the initial investment. So, we deduct it

And, the next year cash inflow is $2,000

So, the payback period equal to

= 3 years + $1,000 ÷ $2,000

= 3.5 years

So, Project A should be accepted as it has less payback period

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Economics can be described as the study of how people use ________ resources to satisfy ________ wants.A) unlimited; unlimitedB)
Masteriza [31]

Answer:

C) limited; unlimited

Explanation:

Economics can be described as the study of how people use limited resources to satisfy unlimited wants.

5 0
3 years ago
Who do you think has the least<br> influence? Why?
tatuchka [14]

Answer:

good stuff

Explanation:

people these days (including me sometimes) put more energy into bad things and negative things .and its partly social media's fault.

3 0
2 years ago
An anticipated purchase of equipment for $1,000,000, with a useful life of eight years and no residual value, is expected to yie
exis [7]

Answer:

3 years

The average rate of return method includes the entire amount of the income earned over the life of the proposal.

a. rate of return on investments

b. may be reconsidered if funds later become available.

Explanation:

Cash payback period measures how long it takes to recover the amount invested in a project from the cumulative cash flow.

Amount invested = $-1,000,000

Amount recovered in year 1 = $-1,000,000 + $400,000 = $-600,000

Amount recovered in year 2 = $-600,000 + 320,00 = $-280,000

Amount recovered in year 3 = $-280,000 + 280,000 = 0

The amount invested is recovered In the 3 year

Average accounting rate = average net income/ average book value

Net present value is the present value of after tax cash flows from an investment less the amount invested. The interest rate used is the rate of return on investments.

The hurdle rate is the least acceptable rate that a project can have for it to be acceptable.

I hope my answer helps you

8 0
3 years ago
Suppose Mary is in consumer equilibrium. The marginal utility of good A is 30, and the price of good A is $2.. . a. if the price
zimovet [89]
 Using formula: Marginal Utility=Change in Total Utility/Change in Quantity
<span>So, the marginal utility of each good will be 30/$2, or 15/$1.
Multiply this marginal utility by the price of each good/service to obtain the marginal utility per unit of good.</span>
<span>Since marginal utility of good A is given then by using this formula the the marginal utility of good B is 60 , MU of good C is 45 and MU of good D is 15</span>

7 0
3 years ago
During the meeting malcolm constantly reminds the rest of the team that he is in charge of this project, and it must be carried
sattari [20]
Malcom seems to be drawing from COERCIVE source of power. 
Coercive means to be using force or threat in order to make some one to do something. From the scenario given above, it can be seen that, Malcom is using threat in order to make others to be subjective to him concerning the project they are handling.<span />
8 0
3 years ago
Read 2 more answers
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