In approximately how many years will the firm break-even based on discounted payback period? Manufacturing firm(In Php 000)123456Net income1072,0813,8965,3286,8628,509Depreciation andamortization14,28614,28614,28614,28614,28614,286Change in NWC(326)(353)(285)(149)(153)(158)Сарех(100,000)Interest expense6,6505,5504,3453,0261,582Incremental cash flows(100,000)20,71721,56422,24222,49122,57622,636Discount factor0.92810.86130.79940.74190.68850.6390

We need to computed the discounted cumulative cash flows to determine the payback period.

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pproximately how many years will the firm break-even based on disco

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

In approximately how many years will the firm break-even based on discounted payback period?

Manufacturing firm
(In Php 000)
1
2
3
4
5
6
Net income
107
2,081
3,896
5,328
6,862
8,509
Depreciation and
amortization
14,286
14,286
14,286
14,286
14,286
14,286
Change in NWC
(326)
(353)
(285)
(149)
(153)
(158)
Сарех
(100,000)
Interest expense
6,650
5,550
4,345
3,026
1,582
Incremental cash flows
(100,000)
20,717
21,564
22,242
22,491
22,576
22,636
Discount factor
0.9281
0.8613
0.7994
0.7419
0.6885
0.6390

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