if a company invests $250,000 in new equipment that will result in extra annual
ID: 1141147 • Letter: I
Question
if a company invests $250,000 in new equipment that will result in extra annual expenses of $198,333, but generate an extra annual income of $240,000 per year, then how long will it take for the company to payback its investment at an interest rate of 9% per year? (b) Determine the no-return payback (or simple payback) period where i=0% if the company requires absolutely no return on its $250,000 investment. 21tta company invests $250,000 in new equipment that will result in extra annual expenses of $198,333, but generate an extra annual income of $240,000 per year, tent ong wil it take for tre company to payback its investment at an interest rate of g% per year? b) Determine the no-return payback or simple payback peros, where-0%. the company requires abschtely no return on its S250.000 investment.Explanation / Answer
(a)
annual net income=240000-198333=41667
use excel function to find number of years for payback=NPER(rate,pmt,pv,fv)
number of years for payback=NPER(rate,pmt,pv,fv)
=NPER(9%,41667,-250000,0)
=9.01 years
(b)
annual net income=240000-198333=41667
simple payback period=250000/41667=6.00 years
the above is answer..
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