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
Problem 1PS
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Question 1 Investment of RM820,000 in new machine to expand production capacity is being consideration by a company. Following are the budgeted cash flows given for next 6 year 1st year 2nd year 3rd year 4th year 5th year 6th year cash flow 80 110 160 250 220 180 1. Calculated discounted payback period Discount factors at the cost of capital of 10% per annum 1st year 2nd year 3rd year 4th year 5th year 6th year 0.909 0.826 0.751 0.683 0.621 0.564
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Transcribed Image Text:Question 1
Investment of RM820,000 in new machine to expand production capacity is being consideration by a company.
Following are the budgeted cash flows given for next 6 year
cash flow
1st year
2nd year
3rd year
4th year
5th year
6th year
1. Calculated discounted payback period
80
110
160
250
220
180
Discount factors at the cost
of capital of 10% per annum
1st year
2nd year
3rd year
4th year
5th year
6th year
0.909
0.826
0.751
0.683
0.621
0.564
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