question archive A company requires all its capital investment projects to have a payback period of 5 years or shorter
A company requires all its capital investment projects to have a payback period of 5 years or shorter
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A company requires all its capital investment projects to have a payback period of 5 years or shorter. This company is currently considering an equipment purchase that has an initial cost of Php 900,000. The equipment is expected to have a ten-year life. Assuming cash flows are equal, how much annual cash inflows are necessary in order to meet the payback period of the equipment?
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choice = 2 points
solution = 3 points
Select one:
a. 90,000
b. 190,000
c. 180,000
d. 170,000
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Payback period=initial cost/annual cash flows
Hence annual cash flows=900,000/5
which is equal to
=180,000
