1. An investment of $200,000 is expected to generate the following cash inflows in six years: (15) Year 1: $70,000 Year 2: $60,000 Year 3: $55,000 Year 4: $15,000 Year 5: $30,000 Year 6: $25,000 Required: Compute payback period of the investment. Should the investment be made if management wants to recover the initial investment in 3 years or less? 1. An investment of $200,000 is expected to generate the following cash inflows in six years: (15) Year 1: $70,000 Year 2: $60,000 Year 3: $55,000 Year 4: $15,000 Year 5: $30,000 Year 6: $25,000 Required: Compute payback period of the investment. Should the investment be made if management wants to recover the initial investment in 3 years or less?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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1. An investment of $200,000 is expected
to generate the following cash inflows
in six years: (15)
Year 1: $70,000
Year 2: $60,000
Year 3: $55,000
Year 4: $15,000
Year 5: $30,000
Year 6: $25,000
Required: Compute payback period of the
investment. Should the investment be
made if management wants to recover the
initial investment in 3 years or less?
Transcribed Image Text:1. An investment of $200,000 is expected to generate the following cash inflows in six years: (15) Year 1: $70,000 Year 2: $60,000 Year 3: $55,000 Year 4: $15,000 Year 5: $30,000 Year 6: $25,000 Required: Compute payback period of the investment. Should the investment be made if management wants to recover the initial investment in 3 years or less?
1. An investment of $200,000 is expected
to generate the following cash inflows
in six years: (15)
Year 1: $70,000
Year 2: $60,000
Year 3: $55,000
Year 4: $15,000
Year 5: $30,000
Year 6: $25,000
Required: Compute payback period of the
investment. Should the investment be
made if management wants to recover the
initial investment in 3 years or less?
Transcribed Image Text:1. An investment of $200,000 is expected to generate the following cash inflows in six years: (15) Year 1: $70,000 Year 2: $60,000 Year 3: $55,000 Year 4: $15,000 Year 5: $30,000 Year 6: $25,000 Required: Compute payback period of the investment. Should the investment be made if management wants to recover the initial investment in 3 years or less?
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