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eztomh ducation.com/hm tpx?-0.5477202765521738 151 2238850579 asearch t Most Visited Getting Started My USC Aiken- Black... The True Story of Poca. BADM 363 Business Finance: Fall 2017 (AL SECTIONS) Crystal Seller FINANCE Exam #4 (Chapter 8) Quesoon 1 (ot 30) Time n An investment project provides cash inflows of $1 225 per year tor eight years (Enter O if the project never pays back. Do not round intermediate calculations and round your answers to 2 decimal places, e.g, 32.16. What is the project payback period if the initial cost is $4 0002 Payback period What is the project intial cost is $5,0502 Payback period years What is the project payback period id the initial cost is $10,8007 years payback penod it the years

Explanation / Answer

Payback Period = A + B C In the above formula, A is the last period with a negative cumulative cash flow; B is the absolute value of cumulative cash flow at the end of the period A; C is the total cash flow during the period after A Alternative 1 Alternative 2 Alternative 3 Yr Cash Flows Cumulative Cash flows Cash Flows Cumulative Cash flows Cash Flows Cumulative Cash flows 0 -4000 -4000 -5050 -5050 -10800 -10800 1 1225 -2775 1225 -3825 1225 -9575 2 1225 -1550 1225 -2600 1225 -8350 3 1225 -325 1225 -1375 1225 -7125 4 1225 900 1225 -150 1225 -5900 5 1225 2125 1225 1075 1225 -4675 6 1225 3350 1225 2300 1225 -3450 7 1225 4575 1225 3525 1225 -2225 8 1225 5800 1225 4750 1225 -1000 5,800 4,750 -1,000 Payback Period = 3+325/1125 Payback Period = 4+150/1225 Payback Period = 0             3.29 yrs           4.12 YRS

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