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The following details are provided by a manufacturing​ company: Product line Investment $ 1 comma 000...

The following details are provided by a manufacturing​ company: Product line Investment $ 1 comma 000 comma 000 Useful life 15 years Estimated annual net cash inflows for first year $ 500 comma 000 Estimated annual net cash inflows for second year $ 430 comma 000 Estimated annual net cash inflows for next ten years $ 140 comma 000 Residual value $ 70 comma 000 Depreciation method Straightminusline Required rate of return 15​% Calculate the payback period for the investment.​ (Round your answer to two decimal​ places.)

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Answer #1

Payback Period :-

Year Cash Flow PV Factor@15% Present Value of Cash Flow Cumulative PV of Cash Flow
1 ($1000000) 1 ($1000000) ($1000000)
1 $500000 0.870 $435000 ($565000)
2 $430000 0.756 $325080 ($239920)
3 $140000 0.658 $92120 (147800)
4 $140000 0.572 $80080 (67720)
5 $140000 0.497 $69580 1860
6 $140000 0432 $60480 $62340
7 $140000 0.376 $52640 $114980
8 $140000 0.327 $45780 $160760
9 $140000 0.284 $39760 $200520
10 $140000 0.247 $34580 $235100

Payback Period = 5 years Approx.

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