Answered: Year Project 1 Project 2 -1000 -1000 1…

Business

Accounting

Year Project 1 Project 2 -1000 -1000 1 500 100 400 300 200 500 4 100 600 100 700

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Solve the following problem applying the method Problem. Assume the following cash flow for 2 projects.Assuming that the cash flows are occurring at the end of the year. Find the payback period for both these projects.

Year
Project 1
Project 2
-1000
-1000
1
500
100
2
400
300
3
200
500
4
100
600
100
700

Definition Definition Net amount of cash that an entity receives and expends over the course of a given period. For a business to continue operating, positive cash flows are required, and they are also necessary to produce value for investors. Investors in particular prefer to see growing cash flows even after capital expenditures have been paid for (which is known as free cash flow).

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