Considering $542,000 Payback Payback Period Project
Considering $542,000 Payback Payback Period Project
Considering $542,000 Payback Payback Period Project
requires an initial investment of $542,000 and returns after-tax cash inflows of $75
per year for 10 years. The firm has a maximum acceptable payback period of 8 vear
a. Determine the payback period for
this project.
b. Should the company accept the project? Why or why not?
Shell Campine
P10-3 Choosing between two projects with acceptable payback periods ng
Gear Inc. is considering two mutually exclusive projects. Each requires an initial
investment (CF,) of $100,000. John Shell, president of the company, has set a max
mum payback period of 4 years. The after-tax cash inflows associated with each
1 $10,000 $40,000
2 20,000 30,000
3 30,000 20,000
A 40,000 10,000
5 20,000 20,000