Q4. Abbas Manufacturing firm uses discounted payback period to evaluate investments in capital assets. The company expects the following annual cash flows from an investment of Rs3.500.000: Cash flows (Rs3500000) Year 1 900000 900000 3 900000 4 900000 900000 6 900000 7 900000 8 000006 Nosalvage/residual value is expected. The company's cost of capital is 12%. Required: 1. Compute discounted payback period of the investment. 2. Is the investment desirable if the required payback period is 4 years or less. ww
Q4. Abbas Manufacturing firm uses discounted payback period to evaluate investments in capital assets. The company expects the following annual cash flows from an investment of Rs3.500.000: Cash flows (Rs3500000) Year 1 900000 900000 3 900000 4 900000 900000 6 900000 7 900000 8 000006 Nosalvage/residual value is expected. The company's cost of capital is 12%. Required: 1. Compute discounted payback period of the investment. 2. Is the investment desirable if the required payback period is 4 years or less. ww
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 4EB: Assume a company is going to make an investment in a machine of $825,000 and the following are the...
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