Christopher Electronics bought new machinery for $5,030,000 million. This is expected to result in additional cash...

Christopher Electronics bought new machinery for $5,030,000 million. This is expected to result in additional cash flows of $1,225,000 million over the next 7 years. What is the payback period for this project? Their acceptance period is five years.

Expert Solution

Yes project should be accepted
PBP
Time	Amount	Cumulative
-	(5,030,000.00)	(5,030,000.00)
1.00	1,225,000.00	(3,805,000.00)
2.00	1,225,000.00	(2,580,000.00)
3.00	1,225,000.00	(1,355,000.00)
4.00	1,225,000.00	(130,000.00)
5.00	1,225,000.00	1,095,000.00
6.00	1,225,000.00	2,320,000.00
7.00	1,225,000.00	3,545,000.00

PBP= 4 + 130,000 / 1225,000
PBP= 4 + .11 Years
PBP = 4.11 Years Approx

ekkarill92 answered 2 years ago

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