Calculate Payback period, Net Present Value and Benefit Cost Ratio Period 0 1 2 3 4...

Calculate Payback period, Net Present Value and Benefit Cost Ratio

Period	0	1	2	3	4	5
Year	2,019	2020	2021	2022	2023	2024
Cash Flows	-30,000	11,000 x .8929 = 9821.9	14,000 x .7972 = 11,160.8	10,000 x .7118= 7,118	7,000 x .6335 = 4434.5	12,000 x .5674 = 6808.8

Solutions

Expert Solution

Payback Period =	A +	B
C

Where,
A is the last period number with a negative cumulative cash flow;
B is the absolute value (i.e. value without negative sign) of cumulative net cash flow at the end of the period A; and
C is the total cash inflow during the period following period A

Payback Period = 2 + (5,000/10,000)

= 2 + 0.5

= 2.5 Years

Benifit Cost Ratio = Discounted value of incremental benefits ÷ Discounted value of incremental costs

= 39,359 ÷ 30,000

= 1.31

jeff jeffy answered 2 months ago

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