Nebraska Co.is reviewing a capital investment of $100,000.This project's projected cash flows over a five-year period are estimated at $35,000 each year.
Required:
(a)Calculate the payback period.
(b)Calculate the break-even time.Assume a 12% hurdle rate and use the table below:

(c)Using the results in (a)and (b),make a recommendation for the project.

Question

Nebraska Co.is reviewing a capital investment of $100,000.This project's projected cash flows over a five-year period are estimated at $35,000 each year.
Required:
(a)Calculate the payback period.
(b)Calculate the break-even time.Assume a 12% hurdle rate and use the table below:
 
(c)Using the results in (a)and (b),make a recommendation for the project.

Quizplus · Accepted Answer

The Answer of Nebraska Co.is reviewing a capital investment of $100,000.This project's projected cash flows over a five-year period are estimated at $35,000 each year.
Required:
(a)Calculate the payback period.
(b)Calculate the break-even time.Assume a 12% hurdle rate and use the table below:
 
(c)Using the results in (a)and (b),make a recommendation for the project.