1. Christopher electronics bought new machinery for $5,045,000 million. This is

Question

1. Christopher electronics bought new machinery for $5,045,000 million. This is expected to result in additional cash flows of $1,225,000 million over the next 7 years. What is the payback period for this project? Their acceptance period is five years.

2.AMP, Inc., has invested $2,165,800 on equipment. The firm uses payback period criteria of not accepting any project that takes more than four years to recover costs. The company anticipates cash flows of $448,386, $512,178, $564,755, $764,997, $816,500, and $825,375 over the next six years. What is the payback period?

Explanation / Answer

1)

payback period = 5045000/1225000 = 4.12 years

2)
amount to payback after year 3 = 2165800 - 448386 -512178 -564755 = 640481

payback period = 3 + 640481/764997 = 3.84 years

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