P12-1B

# P12-1B - P12-1B a Compute the cash payback period for each...

This preview shows pages 1–3. Sign up to view the full content.

P12-1B a.) Project Brown: Capital Investment: \$200,000 Cash Flow Cummulative Cash Flow (Annual NI + Depr.) -> Sum Y1 (\$25,000 + \$40,000) -> \$65,000 \$65,000 Y2 (\$16,000 + \$40,000) -> \$56,000 \$121,000 Y3 (\$13,000 + \$40,000) -> \$53,000 \$174,000 Y4 (\$10,000 + \$40,000) -> \$50,000 \$224,000 Y5 (\$8,000 + \$40,000) -> \$48,000 \$272,000 Project Red: = \$225,000 / (\$20,000 + *\$45,000) = 3.46 years Project Yellow: Capital Investment: \$200,000 Cash Flow Cummulative Cash Flow (Annual NI + Depr.) -> Sum Y1 (\$26,000 + \$50,000) -> \$76,000 \$76,000 Compute the cash payback period for each project. Cash payback = Capital Investment / Net annual cashflow = Capital Investm ent / (Annual NI + Depreciation) *Depreciation = (\$225,000 - \$0) / 5 =\$45,000 *Depreciation = (\$200,000 - \$0) / 5 =\$40,000 Cash payback period: 3.52 years \$200,000 - \$174,000 = \$26,000 \$26,000/\$50,000 = 0.52 *Depreciation = (\$250,000 - \$0) / 5 =\$50,000

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Y2 (\$24,000 + \$50,000) -> \$74,000 \$150,000 Y3 (\$23,000 + \$50,000) -> \$73,000 \$223,000
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### Page1 / 3

P12-1B - P12-1B a Compute the cash payback period for each...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online