Close LUS Antougs enert to approach but should also employ t

Close LUS Antougs enert to approach, but should also employ the net present value method when answer for value to 0 decimal places,e.g. 125. Round answer for Payback period to i decimal place, e.g. 10.5. For MacBook Air

Solution

Requirement a Cash payback period = Initial Investment/ Annual Cash flows = 56,100/ 8,200 = 6.84 Years Net present value of the proposed investment year Description Cash Flows CV Factor at 8% Discounted Cash flows 0 Intial cost of Truck          56,100 1.00000           56,100 1 to 8 years Cash Outflow Savings            8,200 5.74664           47,122 8 salvage value of Truck          28,500 0.54207           15,449 Net present value       1,18,671 Requirement b No, Project does not meet the company\'s cash payback criteria. This investment has 6.84 years of cash payback period which is less than 50% of asset estimated life. Invesment meets the net present value criteria for acceptance. Project has Positive NPV, so Investment can be made.