Business, 12.12.2019 05:31 Kayla5779

An anticipated purchase of equipment for $500,000, with a useful life of 8 years and no residual value, is expected to yield the following annual net incomes and net cash flows: year net income net cash flow 1 $60,000 $120,000 2 50,000 110,000 3 50,000 110,000 4 40,000 100,000 5 40,000 60,000 6 40,000 60,000 7 40,000 60,000 8 40,000 60,000 what is the cash payback period?

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Answer from: mimithurmond03

5 years

Explanation:

The Cash payback period is the period taken for the cumulative inflows from an investment to be equivalent to the amount invested.

Using the table below,

PeriodCash outflowsCash inflows Cumulative Balance

Year 0 (500,000.00) - (500,000.00)

Year 1 - 120,000.00 (380,000.00)

Year 2 - 110,000.00 (270,000.00)

Year 3 - 110,000.00 (160,000.00)

Year 4 - 100,000.00 (60,000.00)

Year 5 - 60,000.00 -

Year 6 - 60,000.00 60,000.00

Year 7 - 60,000.00 120,000.00

Year 8 - 60,000.00 180,000.00

From the table above, the cumulative balance is nil at year 5. Hence the payback period is 5 years.

Answer from: Quest

the investment was $14,174.196

explanation:

a lump sum means that the father of the example made one deposit and leave it be.

we need to know the value of a capital that generated at 4.05% per year during 28 years the sum of $48,613.24

$capital * (1+0.045)^{28} = 48,613.24$

now clearing the formula to solve for capital we got:

$capital = \frac{48,613.24}{(1+0.045)^{28}}$

and we reach the answer investment = $14,174.20

Answer from: Quest

the first successful, urban blues recording, selling more than 75,000 copies, was made in year 1920.

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