ach of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. . Colby Hepworth has just invested $425,000 in a book and video store. She expects to receive a cash incor the investment. .Kylie Sorensen has just invested $1,620,000 in a new biomedical technology. She expects to receive the fo next 5 years: $350,000, $490,000, $810,000, $520,000, and $290,000. . Carsen Nabors invested in a project that has a payback period of 4 years. The project brings in $960,000 . Rahn Booth invested $1,300,000 in a project that pays him an even amount per year for 5 years. The payl equired:
ach of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. . Colby Hepworth has just invested $425,000 in a book and video store. She expects to receive a cash incor the investment. .Kylie Sorensen has just invested $1,620,000 in a new biomedical technology. She expects to receive the fo next 5 years: $350,000, $490,000, $810,000, $520,000, and $290,000. . Carsen Nabors invested in a project that has a payback period of 4 years. The project brings in $960,000 . Rahn Booth invested $1,300,000 in a project that pays him an even amount per year for 5 years. The payl equired:
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
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Payback Period.
Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows.
a. Colby Hepworth has just invested $425,000 in a book and video store. She expects to receive a cash income of $120,000 per year from
the investment.
b. Kylie Sorensen has just invested $1,620,000 in a new biomedical technology. She expects to receive the following cash flows over the
next 5 years: $350,000, $490,000, $810,000, $520,000, and $290,000.
c. Carsen Nabors invested in a project that has a payback period of 4 years. The project brings in $960,000 per year.
d. Rahn Booth invested $1,300,000 in a project that pays him an even amount per year for 5 years. The payback period is 2.5 years.
Required:
1. What is the payback period for Colby? Round your answer to two decimal places.
years
2. What is the payback period for Kylie? Round your answer to one decimal place.
years
3. How much did Carsen invest in the project?
4. How much cash does Rahn receive each year?
per year
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