# Retsa Company is considering an investment in technology to improve its operations. The investment will require an

## Question:

Period Cash Flow

1 . . . . . . . . . . . . . $450,000

2 . . . . . . . . . . . . . 400,000

3 . . . . . . . . . . . . . 350,000

4 . . . . . . . . . . . . . 300,000

Required

1. Determine the payback period for this investment.

2. Determine the break-even time for this investment.

3. Determine the net present value for this investment.

Analysis Component

4. Should management invest in this project? Explain.

5. Compare your answers for parts 1 through 4 with those for Problem 11-5B. What are the causes of the differences in results and your conclusions?

Net Present Value

What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at... 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,...

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