Question
In: Accounting
Blossom Corp. is considering the purchase of a piece of equipment that costs $30000. Projected net...
Blossom Corp. is considering the purchase of a piece of
equipment that costs $30000. Projected net annual cash flows over
the project’s life are:
| Year | Net Annual Cash Flow |
| 1 | $8000 |
| 2 | 15000 |
| 3 | 25000 |
| 4 | 9000 |
The cash payback period is
Solutions
Expert Solution
| Calculation of Pay Back Period | ||
| Year | Cash Flow | Cumulative Net |
| ($) | Cash Flow ($) | |
| 0 | (30,000.00) | (30,000.00) |
| 1 | 8,000.00 | (22,000.00) |
| 2 | 15,000.00 | (7,000.00) |
| 3 | 25,000.00 | 18,000.00 |
| 4 | 9,000.00 | 27,000.00 |
| Payback period = 2nd year + (7,000 / 25,000) | ||
| = 2.28 years | ||
ekkarill92 answered 1 year agoRelated Solutions
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