Compute the payback statistic for Project B if the appropriate cost of capital i

Question

Compute the payback statistic for Project B if the appropriate cost of capital is 11 percent and the maximum allowable payback period is three years. (Round your answer to 2 decimal places. If the project never pays back, then enter a "0" (zero).)

   

  

Compute the payback statistic for Project B if the appropriate cost of capital is 11 percent and the maximum allowable payback period is three years. (Round your answer to 2 decimal places. If the project never pays back, then enter a "0" (zero).)

Explanation / Answer

Compute payback period:

Time

cash flows

cumulative cash flows

0

-12700

-12700

1

3520

-9180

2

4520

-4660

3

1860

-2800

4

0

-2800

5

1340

-1460

here the project never pay backs hence payback period is zero

b)

since the project is not paying back , hence need to be rejected

Time

cash flows

cumulative cash flows

0

-12700

-12700

1

3520

-9180

2

4520

-4660

3

1860

-2800

4

0

-2800

5

1340

-1460

here the project never pay backs hence payback period is zero

b)

since the project is not paying back , hence need to be rejected

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