In: Accounting
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.
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 |