Respuesta :
Answer:
a. 4 years
b. 5 years
Explanation:
The payback period is the time taken for the cash inflows from an investment to equal to the initial cash outflow or amount invested. To get this, the cash inflow are deducted from the outflows until the net is zero.
Considering both expected cash flows (all amounts in $);
Period Initial out flow Inflow Balance Inflow Balance
Year 0 (1,200,000) 0 (1,200,000) 0 (1,200,000)
Year 1 300,000 (900,000) 150,000 (1,050,000)
Year 2 300,000 (600,000) 150,000 (1,050,000)
Year 3 300,000 (300,000) 400,000 (1,050,000)
Year 4 300,000 0 400,000 (1,050,000)
Year 5 100,000 (1,050,000)
From the table above, with an inflow of $300,000 yearly, the inflows would equal the total outflow in 4 years while the annual cash flows: $150,000, $150,000, $400,000, $400,000, and $100,000 would make the inflows equal to the outflows in 5 years.
Answer:
a)The payback period = 4 years
b)The payback period = 5 years
Explanation:
The payback period is the estimated length of time in years it takes
the net cash inflow from a project to equate and recoup the net cash the initial cost
a) Even cash flow
Where a project is expected to generate a series of equal annual net cash inflow, the payback period can be calculated as:
The initial invest /Net cash inflow per year
So the payback period for project X
= $1,200,000/$300,000
= 4 years
b) Uneven cash flow
With the streams of uneven cash flows, at the end of year 5, the project would have recouped
=150,000 + $150,000+ $400,000+ $400,000 + 100,000
= 1,200,000.00
The payback period = 5 years
