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

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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
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Y2 ($24,000 + $50,000) -> $74,000 $150,000 Y3 ($23,000 + $50,000) -> $73,000 $223,000
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P12-1B - P12-1B a Compute the cash payback period for each...

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