Project "Saturn" has the following cashflows for the next 5 years. Additionally, Project Saturn requires $30,000 working capital (WC) for the initial investment year. However, due to various unforeseen circumstances, management believes that only 80% of the WC will be recovered in year 4. The similar projects have a cut off line of 3.5 years.

                       

Year	Net cash flow
0	(200,000)
1	50,000
2	65,000
3	85,000
4	75,000
5	30000
	50,000	Scrap value in year 5

(Replace the bold XXX with the correct response from the possible answers)

  

1) While considering the working capital, the exact payback period is XXX (chose answer from: 3.3, 3, 3.5, 3.625, 3.25, 3.55) years and Saturn should XXX (chose answer from: accept, reject) the project.

2) Without considering the working capital, the exact payback period is XXX (chose answer from: 3.3, 3, 3.5, 3.625, 3.25, 3.55) years and Saturn should XXX (chose answer from: accept, reject) the project.

Answer rating: 100% (QA)

1 While considering the working capital the exact payback period is XXX chose answer from 33 3 35 36... View the full answer