Question
In: Finance
Calculate the payback period for the following project: ICO: $200,000 WACC: 12.3% year ΔNOCFt 1 $45,000...
Calculate the payback period for the following project: ICO: $200,000 WACC: 12.3% year ΔNOCFt 1 $45,000 2 $50,000 3 $42,000 4 $39,000 5 $35,000 6 $32,000 7 $28,000 3.687 years 4.686 years 4.128 years 4.732 years none of the above
Solutions
Expert Solution
As per
the details given in the information-
Correct Answer is option 4.686 years
| Year | Cashflow | Cummulative CF |
| 0 | -2,00,000.00 | -2,00,000.00 |
| 1 | 45,000.00 | 45,000.00 |
| 2 | 50,000.00 | 95,000.00 |
| 3 | 42,000.00 | 1,37,000.00 |
| 4 | 39,000.00 | 1,76,000.00 |
| 5 | 35,000.00 | 2,11,000.00 |
| 6 | 32,000.00 | 2,43,000.00 |
| 7 | 28,000.00 | 2,71,000.00 |
Payback period = 4 years + {( 200000 - 176000) /35000
Payback period = 4.686 years
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jeff jeffy answered 1 year agoRelated Solutions
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