Sentinel Company is considering an investment in technology to improve its opera
ID: 2521306 • Letter: S
Question
Sentinel Company is considering an investment in technology to improve its operations. The investment will require an initial outlay of 5245,000 and will yield the following expected cash flows. Management requires investments to have a payback period of 4 years, and it requires a 9% return on investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the table provided.) Period Cash Flow S 47,000 53,700 75,400 94,400 128,200 Required 1. Determine the payback period for this investment (Enter cash outflows with a minus sign. Round your Payback Period answer to 1 decimal place.) Cash inflow outflow) Cumulative Net Cash Inflow outflow) Year S (245,000) Payback periodExplanation / Answer
Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Year Cash inflow (outflow) Cumulative net cash inflow (Outflow) 0 (245,000.00) (245,000.00) 1.00 47,000.00 (198,000.00) 2.00 53,700.00 (144,300.00) 3.00 75,400.00 (68,900.00) 4.00 94,400.00 25,500.00 5.00 126,200.00 151,700.00 Paback period= 3 + 68900/94400 Paback period= 3 + .73 Years Paback period= 3.73 Years 2) Year Cash inflow (outflow) Table Factor Present Value of cash flows Cumulative net cash inflow (Outflow) 0 (245,000.00) 1.0000 (245,000.00) (245,000.00) 1.00 47,000.00 0.9174 43,119.27 (201,880.73) 2.00 53,700.00 0.8417 45,198.22 (156,682.52) 3.00 75,400.00 0.7722 58,222.63 (98,459.88) 4.00 94,400.00 0.7084 66,875.34 (31,584.54) 5.00 126,200.00 0.6499 82,021.34 50,436.80 Break even Time = 4 + 31,584.54/82,021.34 Break even Time = 4 + .39 Years Break even Time = 4.39 Years 3) Net present Value - Refer Discounted cash flow table in 2 above 50,436.80
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