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

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 ago

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