NPV(Net Present Value) with discount rate is 6% for this period and cashflow as followed. Period 0, Cashflow ($150,000) Period 1, Cashflow $70,000 Period 2, Cashflow $80,000 Net present value is 71,198. Payback period is 2 years. Please elaborate in detail the obvious problem with using the payback method (Profit Index, NPV, IRR & Time Value Of Money).
NPV(Net Present Value) with discount rate is 6% for this period and cashflow as followed. Period 0, Cashflow ($150,000) Period 1, Cashflow $70,000 Period 2, Cashflow $80,000 Net present value is 71,198. Payback period is 2 years. Please elaborate in detail the obvious problem with using the payback method (Profit Index, NPV, IRR & Time Value Of Money).
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 16EA: Project B cost $5,000 and will generate after-tax net cash inflows of $500 in year one, $1,200 in...
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NPV(
- Period 0, Cashflow ($150,000)
- Period 1, Cashflow $70,000
- Period 2, Cashflow $80,000
Net present value is 71,198.
Payback period is 2 years.
Please elaborate in detail the obvious problem with using the payback method (Profit Index, NPV,
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