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kolbaska11 [484]
3 years ago
10

You are considering an investment in a startup that will cost $100,000 but you will receive a cash inflow of $25,000 every year

for 5 years from the sale of products the startup will manufacture. The required return is 9%, and payback cutoff is 5 years. a) What is the payback period
Business
1 answer:
bulgar [2K]3 years ago
8 0

Answer:

Simple payback is 4 years

Total discounted Payback is more than the 5 years which is the payback cutoff period.

Explanation:

Payback period is the time period in which the project recovers the initial cost incurred. Lower the payback period the more beneficial will be the project.

Simple payback = $100,000 / $25,000 = 4 years

Discounted Payback

Discounted payback is calculated by using the present value of future cash flows.

Total discounted cash flows = 22935.78 + 21042.0 + 19304.59 + 17710.63 + 16248.28 = 97,241.28

As sum of all cash flows are less than the initial investment so, total discounted Payback is more than the 5 years which is the payback cutoff period.

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Answer:

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Acording to the data, we have the following:

The current spot exchange is $1.55=€1.00

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Hence,to calculate  the least value this option should sell for we have to calculate the following:

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hope this helps.

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Answer and Explanation:

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Tactical actions, on the other hand, are flexible and involves actions taken on short term basis. Tactical actions are majorly bye-product of strategic decision.

On this note, Circus Aircraft`s  decision to double its plant capacity over the next two years is a strategic action because such a large plant expansion will require a major commitment of resources. And the action will not easily reversible.

Other options in the question are not totally right.

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