Bronco, inc., imposes a payback cutoff of three years for its international investment projects. year cash flow (a) cash flow (b) 0 â€"$ 62,000 â€"$ 72,000 1 24,000 16,000 2 30,000 19,000 3 22,000 28,000 4 9,000 232,000 what is the payback period for both projects?
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Ответ:
Explanation:
For Project A,
Year Cash Flow (A) Cumulative Cash flow
0 -62,000 -62,000
1 24,000 -38,000
2 30,000 -8,000
3 22,000 14,000
4 9,000 23,000
Payback period (PBP) for Project (A) = Last year with negative cumulative cash flow + (Absolute value of last year's negative cumulative cash flows/the cash flow of the following year of negative cumulative cash flows)
PBP = 2 + (8,000/22,000) years
PBP = 2.36 years
Therefore, the payback period for project A is 2.36 years
For Project B,
Year Cash Flow (B) Cumulative Cash flow
0 -72,000 -72,000
1 16,000 -56,000
2 19,000 -37,000
3 28,000 -9,000
4 232,000 223,000
Payback period (PBP) for project (B) = Last year with negative cumulative cash flow + (Absolute value of last year's negative cumulative cash flows/the cash flow of the following year of negative cumulative cash flows)
PBP = 4 + (9,000/223,000) years
PBP = 4.04 years
Therefore, the payback period for project B is 4.04 years
Ответ: