Cfc session 7 ch8

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Unformatted text preview: luating a new project for her firm, Basket Wonders (BW). She has determined that the after-tax cash flows for the project will be $10,000; $12,000; $15,000; $10,000; and $7,000, respectively, for each of the Years 1 through 5. The initial cash outlay will be $40,000. 37 Certified Financial Controller CFC Independent Project • For this project, assume that it is this project assume that it is independent of any other potential projects that Basket Wonders may undertake. • Independent – A project whose project whose acceptance (or rejection) does not prevent the acceptance of other projects under consideration. 38 Certified Financial Controller CFC 19 Payback Period (PBP) 0 1 –40 K 10 K 2 12 K 3 15 K 4 5 10 K 7K PBP PBP is the period of time required for the cumulative expected cash flows from an investment project to equal the initial cash outflow. 39 Certified Financial Controller CFC Payback Solution (#1) (#1 0 1 –40 K (-b) 10 K 10 K Cumulative Inflows 40 3 (a) 2 12 K 22 K PBP 15 K 37 K(c) 4 10 K (d) 47 K 5 7K 54 K =a+(b...
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This note was uploaded on 05/28/2013 for the course FINANCE economy taught by Professor Nill during the Fall '12 term at Bronx School Of Law And Finance.

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