For the next 2 questions: Mr. A is considering to invest in a business. The business will cost $100,000 to set up and cost of capital is 10%. It is expected to generate the following yearly net cash flows: $ Year 1 2 3 4 5 (20,000) 30,000 35,000 40,000 150,000
For the next 2 questions: Mr. A is considering to invest in a business. The business will cost $100,000 to set up and cost of capital is 10%. It is expected to generate the following yearly net cash flows: $ Year 1 2 3 4 5 (20,000) 30,000 35,000 40,000 150,000
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
What is the discounted payback period?
How many percent of the initial capital is recovered after 3 years?
![For the next 2 questions: Mr. A is considering to invest in a business. The business will cost $100,000 to set up and
cost of capital is 10%. It is expected to generate the following yearly net cash flows:
Year
1
2
3
4
5
(20,000)
30,000
35,000
40,000
150,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe3a3955c-ccb8-4ffd-b61e-fb7f8d7be1b2%2Fe870e1b2-dcd6-435b-aa51-2aa793a012e0%2Fee2271_processed.png&w=3840&q=75)
Transcribed Image Text:For the next 2 questions: Mr. A is considering to invest in a business. The business will cost $100,000 to set up and
cost of capital is 10%. It is expected to generate the following yearly net cash flows:
Year
1
2
3
4
5
(20,000)
30,000
35,000
40,000
150,000
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