Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Requirement 1. Compute the payback, the ARR, the NPV, and the profitability index of these two options.
Compute the payback for both options. Begin by completing the payback schedule for Option 1 (refurbish).
Year
0
1
2
3
5
6
7
8
Net Cash Outflows
Amount Invested
$
2,400,000
Net Cash Inflows
Annual
Accumulated
$ 2,150,000 $
280,000
230,000
180,000
130,000
130,000
130,000
130,000
2,150,000
2,430,000
2,660,000
2,840,000
2,970,000
3,100,000
3,230,000
3,360,000
(Round your answer to one decimal place.)
The payback for Option 1 (refurbish current machine) is
years.
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Transcribed Image Text:Requirement 1. Compute the payback, the ARR, the NPV, and the profitability index of these two options. Compute the payback for both options. Begin by completing the payback schedule for Option 1 (refurbish). Year 0 1 2 3 5 6 7 8 Net Cash Outflows Amount Invested $ 2,400,000 Net Cash Inflows Annual Accumulated $ 2,150,000 $ 280,000 230,000 180,000 130,000 130,000 130,000 130,000 2,150,000 2,430,000 2,660,000 2,840,000 2,970,000 3,100,000 3,230,000 3,360,000 (Round your answer to one decimal place.) The payback for Option 1 (refurbish current machine) is years.
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