A company has an investment opportunity costing $ 400000 with the following expected net cash inflows:...

 

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A company has an investment opportunity costing $ 400000 with the following expected net cash inflows: 1 2 Years 3 4 5 6 7 1 2 8 9 10 3 4 5 6 7 8 9 10 Cash inflows 70,000 70,000 70,000 Determine the following: a) Pay-back period b) Accounting Rate of Return c) Profitability index at 10% discount rate You are given PV of USD 1 at 10% and 15% discount rate: Year P.V. factor @ 10% 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 70,000 70,000 80,000 100,000 150,000 100,000 40,000 P.V. factor @ 15% 0.870 0.756 0.658 0.572 0.497 0.432 0.376 0.327 0.284 0.247 A company has an investment opportunity costing $ 400000 with the following expected net cash inflows: 1 2 Years 3 4 5 6 7 1 2 8 9 10 3 4 5 6 7 8 9 10 Cash inflows 70,000 70,000 70,000 Determine the following: a) Pay-back period b) Accounting Rate of Return c) Profitability index at 10% discount rate You are given PV of USD 1 at 10% and 15% discount rate: Year P.V. factor @ 10% 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 70,000 70,000 80,000 100,000 150,000 100,000 40,000 P.V. factor @ 15% 0.870 0.756 0.658 0.572 0.497 0.432 0.376 0.327 0.284 0.247

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a Payback period The payback period is the time it takes for the initial investment to be recovered To calculate the payback period we need to find th... View the full answer