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Bezzdna [24]
3 years ago
13

Mendez Company is considering a capital project that costs $16,000. The project will deliver the following cash flows: Year 1 Ye

ar 2 Year 3 Year 4 Year 5 $8,000 $6,000 $5,000 $6,000 $5,000 Using the incremental approach, the payback period for the investment is:
Business
1 answer:
kkurt [141]3 years ago
5 0

Answer:

2.4 years

Explanation:

Years  Cash   Cumulative Cashflow

1          8000         8000

<u>2         6000         14000</u>

3          5000        19000

4          4000        25000

5          <u>5000</u>        30000

           <u>30000</u>

Payback period = 2 years + (16,000 - 14,000) / 5,000

Payback period = 2 years + 0.4 years

Payback period = 2.4 years

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before the period begins

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Quantitative Problem 2: Hadley Inc. forecasts the year-end free cash flows (in millions) shown below.
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The stock price is mathematically given as

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<h3>What is the stock price?</h3>

Generally, the equation for is Value after year  mathematically given as

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