Question
Asked Dec 10, 2019
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Please show how to do in excel. Thank you.

Question 7a
Two projects, Alpha and Beta, are being considered using the payback method. Each has an initial cost of $100,000.
The annual cash flows for each project are listed below.
|a) What is the pay back period in years for Alpha? (round to two decimal places)
b) What is the pay back period in years for Beta? (round to two decimal places)
Question 7b
Year Project Alpha Project Beta
15,000
25,000
25,000
25,000
25,000
45,000
25,000
4
30,000
25,000
20,000
25,000
15,000
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Question 7a Two projects, Alpha and Beta, are being considered using the payback method. Each has an initial cost of $100,000. The annual cash flows for each project are listed below. |a) What is the pay back period in years for Alpha? (round to two decimal places) b) What is the pay back period in years for Beta? (round to two decimal places) Question 7b Year Project Alpha Project Beta 15,000 25,000 25,000 25,000 25,000 45,000 25,000 4 30,000 25,000 20,000 25,000 15,000

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Expert Answer

Step 1

Payback period is the period at which the investment made is expected to be recovered by an investor.

Step 2

Given:

Initial investment for both projects is $100,000

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Cashflows of Project B (S) 15,000 25,000 Year Cashflows of Project A (S) 25,000 2 25,000 25,000 25,000 25,000 25,000 3 45,000 30,000 20,000 15,000 4 5 6.

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Step 3

(a)

For equal annual cashflows following fo...

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Initial cost Payback period = Annual cashflows

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