Payback PV of all CFs (RRR = 20%) PV of - CFs (RRR = 20%) Cash FV of + CFs Year Flow (RRR = 20%) %3D (1,000s) -$5,000 $3,000 $3,500 2 $3,200 $2,800 4 $2,500 1. What is the payback period? 2. Assume a 20% RRR, what is the NPV?

Payback PV of all CFs (RRR = 20%) PV of - CFs (RRR = 20%) Cash FV of + CFs Year Flow (RRR = 20%) %3D (1,000s) -$5,000 $3,000 $3,500 2 $3,200 $2,800 4 $2,500 1. What is the payback period? 2. Assume a 20% RRR, what is the NPV?

Fundamentals of Financial Management (MindTap Course List)

15th Edition

ISBN:9781337395250

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter12: Cash Flow Estimation And Risk Analysis

Section: Chapter Questions

Problem 17P: EQUIVALENT ANNUAL ANNUITY A firm has two mutually exclusive investment projects to evaluate. The...

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Question

Please explain, I don't understand.

Payback
PV of all CFs
(RRR = 20%)
PV of - CFs
(RRR = 20%)
Cash
FV of + CFs
Year
Flow
(RRR = 20%)
%3D
(1,000s)
-$5,000
$3,000
$3,500
2
$3,200
$2,800
4
$2,500
1. What is the payback period?
2. Assume a 20% RRR, what is the NPV?

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