Long-term investment decision, payback method Personal Finance Problem Bill Williams has the opportunity to invest in project A that costs $6,400 today and promises to pay $2,100, $2,600, $2,600, $2,000 $1,800 over the next 5 years. Or, Bill can invest $6,400 in project B that promises to pay $1,600, $1,600, $1,600, $3,600 $3,900 over the next 5 years. (Hint: For mixed stream cash inflows, calculate cumulative cash inflows on a year-to-year basis until the initial investment is recovered.) a. How long will it take for Bill to recoup his initial investment in project A? b. How long will it take for Bill to recoup his initial investment in project B?
Long-term investment decision, payback method Personal Finance Problem Bill Williams has the opportunity to invest in project A that costs $6,400 today and promises to pay $2,100, $2,600, $2,600, $2,000 $1,800 over the next 5 years. Or, Bill can invest $6,400 in project B that promises to pay $1,600, $1,600, $1,600, $3,600 $3,900 over the next 5 years. (Hint: For mixed stream cash inflows, calculate cumulative cash inflows on a year-to-year basis until the initial investment is recovered.) a. How long will it take for Bill to recoup his initial investment in project A? b. How long will it take for Bill to recoup his initial investment in project B?
PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
6th Edition
ISBN:9781337117005
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Chapter13: Investing In Mutual Funds, Etfs, And Real Estate
Section: Chapter Questions
Problem 9FPE
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Long-term investment decision, payback method
Bill Williams has the opportunity to invest in project A that costs
$6,400 today
and promises to pay
$2,100,
$2,600,
$2,600,
$2,000
$1,800
over the next 5 years.
Or, Bill can invest
$6,400 in project B that
promises to pay
$1,600,
$1,600,
$1,600,
$3,600
$3,900
over the next 5 years.
(Hint:
For mixed stream
recovered.)
a. How long will it take for Bill to recoup his initial investment in project A?
b. How long will it take for Bill to recoup his initial investment in project B?
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