Payback Period
A construction engineer plans on investing 200,000 in a new cement-mixing machine and estimates that it will generate about 50,000 in annual cash flow. Calculate the payback period for the machine
200,000 / 50,000 = 4 years
Another construction engineer aims to invest 300,000 in a new timber-cutting machine. The machine is expected to generate the following cash flows in the first four years: 60,000, 80,000, 100,000, 120,000. Calculate the payback period for the machine.
you miiiight have to make a table im sorry
60,000 / 120,000 X 12 months = 6 months
3 years and 6 months
A business is considering purchasing a new commercial photocopier at a cost of 150,000. It expects the following revenue streams for the next 5 years: 30,000, 50,000, 75,000, 90,000, 100,000. Calculate its ARR
(345,000 - 150,000) / 5 = 39,000
39,000 / 150,000 x 100 = 26%
Consider an investment project that costs 500,000 and produces net cash flows over the next four years as follows: 100,000, 200,000, 300,000, 250,000.
Calculate the net present value at a discount factor of 8% (0.9259, 0.8573, 0.7938, 0.7350)
685,940 - 500,000 = 185,940