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Project: B Initial cost R100 000 R115 000 R90 000 Expected life 5 years 5 years 4 years Scrap value R5 000 R7 500 R4 000 Cash-inflows R R R End year 1 40 000 50 000 27 500 2 35 000 35 000 32 500 3 32 500 25 000 47 500 30 000 25 000 50 000 5 27 500 25 000 The company estimates its cost of capital is 18%. Required: (a) Calculate the payback period for Project A. O 2 years 8 months or 2.8 years O 3 years 2 months or 3.2 years

Project: B Initial cost R100 000 R115 000 R90 000 Expected life 5 years 5 years 4 years Scrap value R5 000 R7 500 R4 000 Cash-inflows R R R End year 1 40 000 50 000 27 500 2 35 000 35 000 32 500 3 32 500 25 000 47 500 30 000 25 000 50 000 5 27 500 25 000 The company estimates its cost of capital is 18%. Required: (a) Calculate the payback period for Project A. O 2 years 8 months or 2.8 years O 3 years 2 months or 3.2 years

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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Project: A B Initial cost R100 000 R115 000 R90 000 Expected life 5 years 5 years 4 years Scrap value R5 000 R7 500 R4 000 Cash-inflows R R End year 1 40 000 50 000 27 500 35 000 35 000 32 500 3 32 500 25 000 47 500 4 30 000 25 000 50 000 27 500 25 000 The company estimates its cost of capital is 18%. Required: (a) Calculate the payback period for Project A. O 2 years 8 months or 2.8 years O 3 years 2 months or 3.2 years O 2 years 6 months or 2.6 years O 4 years 2 months or 4.2 years O None of the above
Transcribed Image Text:Project: A B Initial cost R100 000 R115 000 R90 000 Expected life 5 years 5 years 4 years Scrap value R5 000 R7 500 R4 000 Cash-inflows R R End year 1 40 000 50 000 27 500 35 000 35 000 32 500 3 32 500 25 000 47 500 4 30 000 25 000 50 000 27 500 25 000 The company estimates its cost of capital is 18%. Required: (a) Calculate the payback period for Project A. O 2 years 8 months or 2.8 years O 3 years 2 months or 3.2 years O 2 years 6 months or 2.6 years O 4 years 2 months or 4.2 years O None of the above
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