A multinational creates a new clothing brand to be sold from 1 January 2022 until 31 December
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Question:
A multinational creates a new clothing brand to be sold from 1 January 2022 until 31 December 2034. Product development and marketing begin on 1 January 2020. The cost of bringing the products to market comprises of £9 million payable on 1 January 2020 and £12 million payable continuously during 2021. From 1 January 2022, when the textiles are in production, it is assumed that income will be received half-yearly in arrears at a rate of £5 million per annum.
Consider an effective rate of interest of 9% per annum. What is the discounted payback period, starting with the initial cash flow on 1 January 2020?
Related Book For
Financial Accounting
ISBN: 978-0078025549
3rd edition
Authors: J. David Spiceland, Wayne Thomas, Don Herrmann
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