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exam kit qst 323
initial inv 400000
cash flow for 5 yrs, 175000, 225000, 340000, 165000,125000
depre on straight line basis, machinery expected val of 50000 end of 5year
whats the payback?the ans given is 1.5 but im getting it as 1.9
could you please explain the method?I do not have the Kaplan Exam Kit.
I assume that the question is asking for the payback period, however if that is the case then I do not believe that you have typed out the question correctly because the payback period is neither 1.5 or 1.9 years!!!
On the information that you have typed, then it takes exactly 2 years to get back cash of 400,000.
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