(Ignore income taxes in this problem.) The management of Helberg Corporation is
ID: 2485820 • Letter: #
Question
(Ignore income taxes in this problem.) The management of Helberg Corporation is considering a project that would require an investment of $231,000 and would last for 6 years. The annual net operating income from the project would be $121,000, which includes depreciation of $34,000. The scrap value of the project's assets at the end of the project would be $20,200. The cash inflows occur evenly throughout the year. The payback period of the project is closest to:
1.5 years
1.9 years
1.3 years
1.6 years
Explanation / Answer
The payback period of the project is closest to: 1.5 years Net Income 121,000.00 Add : Depreciation 34,000.00 Cash Flows after depreciation 155,000.00 PBP Time Amount Cumulative - (231,000.00) (231,000.00) 1.00 155,000.00 (76,000.00) 2.00 155,000.00 79,000.00 3.00 155,000.00 234,000.00 4.00 155,000.00 389,000.00 5.00 155,000.00 544,000.00 6.00 175,200.00 719,200.00 PBP= 1 + 76,000/155,000 PBP= 1.49 Years PBP= 1.5 Years Approx
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.