An investment project provides cash inflows of $645 per year for eight years. a.)What is the...

An investment project provides cash inflows of $645 per year for eight years.

a.)What is the project payback period if the initial cost is $1,800?

b.) What is the project payback period if the initial cost is $3,500?

c.) What is the project payback period if the initial cost is $5,300?

Solutions

Expert Solution

Payback period - Payback period of an investment is the time required for cumulative net cash inflows from an investment equal to cash out flows'

Accordingly , We can calculate the pay back period using the below table.

a) Intial investment is 1800

Formula = Total Initial Investment / Cash in flows per year

= 1800/645

= 2.790698

b) Initial Investment is 3500

Formula = Total Initial Investment / Cash in flows per year

= 3500/645

= 5.426357

Initial Investment is 5300

Formula = Total Initial Investment / Cash in flows per year

5300/645 = 8.217054

It is to be noted that here we are unable to recover our investment with the cash flows given .

As the pay back period is more than 8 years

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

An investment project provides cash inflows of $660 per year for eight years. a. What is...

An investment project provides cash inflows of $660 per year for eight years. a. What is the project payback period if the initial cost is $1,825? (Enter 0 if the project never pays back. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the project payback period if the initial cost is $3,550? (Enter 0 if the project never pays back. Do not round intermediate calculations and round your answer to...

An investment project provides cash inflows of $770 per year for 13 years. a. What is...

An investment project provides cash inflows of $770 per year for 13 years. a. What is the project payback period if the initial cost is $1,540? b. What is the project payback period if the initial cost is $5,082? c. What is the project payback period if the initial cost is $10,780?

An investment project provides cash inflows of $590 per year for 11 years. a. What is...

An investment project provides cash inflows of $590 per year for 11 years. a. What is the project payback period if the initial cost is $1,770? b. What is the project payback period if the initial cost is $4,366? c. What is the project payback period if the initial cost is $7,080?

An investment project provides cash inflows of $675 per year for 8 years. What is the...

An investment project provides cash inflows of $675 per year for 8 years. What is the project payback period if the initial cost is $1,700?

An investment project provides cash flows of $640 per year for 8 years. a) What is...

An investment project provides cash flows of $640 per year for 8 years. a) What is the payback if the initial outlay is $2,700? b) What if the initial outlay is $3,900? c) Will the initial outlay be recovered before the end of the project if it is $6,800?

A project with an initial investment of $46,000 and cash inflows of $11,000 a year for...

A project with an initial investment of $46,000 and cash inflows of $11,000 a year for six years, calculate NPV given a required return of 12%/year. Select one: a. $888 b. -$347 c. -$1,205 d. -$775 e. $1,699

A project that provides annual cash flows of $17673 for eight years costs $80339 today. What...

A project that provides annual cash flows of $17673 for eight years costs $80339 today. What is the NPV for the project if the required return is 19 percent? (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 32.16))

A project will produce cash inflows of $1,750 a year for four years. The project initially...

A project will produce cash inflows of $1,750 a year for four years. The project initially costs $10,600 to get started. In year five, the project will be closed and as a result should produce a cash inflow of $8,500. What is the net present value of this project if the required rate of return is 14.75%? -$1,306.18 -$935.56 $5,474.76 $1,011.40

Project L costs $35,000, its expected cash inflows are $12,000 per year for 8 years, and...

Project L costs $35,000, its expected cash inflows are $12,000 per year for 8 years, and its WACC is 12%. What is the project's MIRR? Round your answer to two decimal places. Do not round your intermediate calculations.

Project L costs $47,089.43, its expected cash inflows are $10,000 per year for 11 years, and...

Project L costs $47,089.43, its expected cash inflows are $10,000 per year for 11 years, and its WACC is 11%. What is the project's IRR? Round your answer to two decimal places.

Subjects