Homework Lecture 7

Name: Nguyen Thi Thu Loan

Class: GBD0801
1. Each of the following parts is independent. Assume all cash flows are after-tax cash flows.
A. Payback Period = Original investment/Annual cash flows
= 200.000/60.000
= 3.33
B. Invested $500.000 in a new biomedical technology
- Year1: 125.000 => payback period: 375.000
- Year2: 175.000 => payback period: 200.000
=> Payback has been 2 years
-Year3: 250.000 => a year of 250 so how many years to spend 200
=> 200.000/250.000 = 0.8*12 = 9.6
=> 2 years 9 months 18 days
C. Payback Period = Original investment/Annual cash flows
=> Original investment = Annual cash flows* Payback Period
= 120.000*3
= 360.000
D. Payback Period = Original investment/Annual cash flows
=> Annual cash flows = Original investment/ Payback Period
= 250.000/2.5
= 100.000