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a) the payback period is how many years? b) the project meets/does not eat the benchmark?

a) the payback period is how many years? b) the project meets/does not eat the benchmark?

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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a) the payback period is how many years? b) the project meets/does not eat the benchmark?
The American Pharmaceutical Company (APC) has a policy that all capital investments must have a five-year or less discounted payback period in order to be considered for funding. The MARR at APC is 10% per year. Is the above project able to meet this benchmark for funding? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year. End of Year 0 1 2 3 4 5 6-9 Cash Flow - $275,000 - $30,000 $50,000 $170,000 $250,000 $340,000 $105,000
Transcribed Image Text:The American Pharmaceutical Company (APC) has a policy that all capital investments must have a five-year or less discounted payback period in order to be considered for funding. The MARR at APC is 10% per year. Is the above project able to meet this benchmark for funding? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year. End of Year 0 1 2 3 4 5 6-9 Cash Flow - $275,000 - $30,000 $50,000 $170,000 $250,000 $340,000 $105,000
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