Use the following information for problems 4, 5, 6, and 7A project initially costs $40,000 and has a 10 year lifetime. The project returns benefits of S10,000 at the end of the first year,increasing by 12% in each of the following years. Costs are incurred at a rate of S4,000 per year. The anticipated salvagevalue is S7,000. MARR = 15%.4. The benefit/cost ratio is closest to ...a) 1.24b) 1.27c) 1.30O 1.33e) 1.37) 1.41g) 1.43h) 1.455. The simple payback period is closest to ...D4.7 yearsb) 3.5 yearsc) 8.1 yearsd) 4.9 yearse) 4.5 yearsf) 4.1 yearsg) 8.4 yearsh) 5.7 yearsi) a payback period does not occur

Simple payback period is the period or the time which a project takes in order to recover the cost…

Answered: O 1.33 c) 1.37 D 1.41 g) 1.43 h) 1.45…

Business

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O 1.33 c) 1.37 D 1.41 g) 1.43 h) 1.45 5. The simple payback period is closest to ...

EBK CFIN

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ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter9: Capital Budgeting Techniques

Section: Chapter Questions

Problem 11PROB

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Question

Use the following information for problems 4, 5, 6, and 7
A project initially costs $40,000 and has a 10 year lifetime. The project returns benefits of S10,000 at the end of the first year,
increasing by 12% in each of the following years. Costs are incurred at a rate of S4,000 per year. The anticipated salvage
value is S7,000. MARR = 15%.
4. The benefit/cost ratio is closest to ...
a) 1.24
b) 1.27
c) 1.30
O 1.33
e) 1.37
) 1.41
g) 1.43
h) 1.45
5. The simple payback period is closest to ...
D4.7 years
b) 3.5 years
c) 8.1 years
d) 4.9 years
e) 4.5 years
f) 4.1 years
g) 8.4 years
h) 5.7 years
i) a payback period does not occur

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