+ Explanation of Time Needed for Payback with uneven cash flows Note: For each year in which the unrecovered investment meets or exceeds the annual cash flow, this is 1. For years in which the annual cash flow exceeds the unrecovered investment, this is the unrecovered investment divided by the annual cash flow for that year. If Then Unrecovered Annual Time Needed 1 year Investment Cash Flow for Payback Unrecovered Annual Time Needed Unrecovered Investment Investment Cash Flow for Payback Annual Cash Flow for the Year Compute the time needed for payback for the following example assuming the investment required an up-front capital outlay of $100,000 and the uneven annual cash flows for each year are provided in the table. If an amount is zero, enter "0". For the time needed for payback, enter your answer to one decimal place, if less than one year (i.e. 0.2, 0.5, etc.). Unrecovered Investment Year Annual Cash Flow Time Needed for Payback (Beginning of year) 1 $100,000 $20,000 1 year 200,000 30,000 500,000 40,000 50,000 60,000 Total time needed for payback (to the nearest tenth of a year) = 3.2 V years
+ Explanation of Time Needed for Payback with uneven cash flows Note: For each year in which the unrecovered investment meets or exceeds the annual cash flow, this is 1. For years in which the annual cash flow exceeds the unrecovered investment, this is the unrecovered investment divided by the annual cash flow for that year. If Then Unrecovered Annual Time Needed 1 year Investment Cash Flow for Payback Unrecovered Annual Time Needed Unrecovered Investment Investment Cash Flow for Payback Annual Cash Flow for the Year Compute the time needed for payback for the following example assuming the investment required an up-front capital outlay of $100,000 and the uneven annual cash flows for each year are provided in the table. If an amount is zero, enter "0". For the time needed for payback, enter your answer to one decimal place, if less than one year (i.e. 0.2, 0.5, etc.). Unrecovered Investment Year Annual Cash Flow Time Needed for Payback (Beginning of year) 1 $100,000 $20,000 1 year 200,000 30,000 500,000 40,000 50,000 60,000 Total time needed for payback (to the nearest tenth of a year) = 3.2 V years
Chapter14: Multinational Capital Budgeting
Section: Chapter Questions
Problem 2IEE
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