Each of the following scenarios is independent. Assume that all cash flows are after- tax cash flows.

Question:

Each of the following scenarios is independent. Assume that all cash flows are after- tax cash flows.
a. Colby Hepworth has just invested $ 400,000 in a book and video store. She expects to receive a cash income of $ 120,000 per year from the investment.
b. Kylie Sorensen has just invested $ 1,400,000 in a new biomedical technology. She expects to receive the following cash flows over the next five years: $ 350,000, $ 490,000, $ 700,000, $ 420,000, and $ 280,000.
c. Carsen Nabors invested in a project that has a of four years. The project brings in $ 960,000 per year.
d. Rahn Booth invested $ 1,300,000 in a project that pays him an even amount per year for five years. The is 2.5 years.
Required:
1. What is the for Colby?
2. What is the for Kylie?
3. How much did Carsen invest in the project?
4. How much cash does Rahn receive each year?
Payback Period
Payback period method is a traditional method/ approach of capital budgeting. It is the simple and widely used quantitative method of Investment evaluation. Payback period is typically used to evaluate projects or investments before undergoing them,...