Houston Fashions is considering a new product line that would require an investment of $ 140,000 in fixtures and displays and $ 180,000 in working capital. Store managers expect the following pattern of net cash inflows from the new product line over the life of the investment.
Year Amount
1 $70,000
2 78,000
3 72,000
4 56,000
5 50,000
6 48,000
7 44,000
a. Compute the payback period for the proposed new product line. Houston Fashions requires a four- year pre-tax payback period on its investments. (Round to one decimal point.) Should the company make this investment? Explain.
b. Should Houston Fashions use any other capital project evaluation method(s) before making an investment decision? Explain.
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Ответ:
4.88 years
other methods should be used because payback method does not account for the time value of money
Explanation:
Ответ:
Step-by-step:
The first flip numbers will always add up to 1 so you do
1 - 2/7= 5/7
now it gets easy...
The second flip head will be 2/7 because it is a biased dice and the second flip tail will be 5/7
This also applies for the bottom 2: 2/7 head, 5/7 tails
hope this helped :)