Solution-What is the payback period or undiscounted

What is the payback period or undiscounted

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Problem 1: Using the tax shield approach, calculate OCF given the following information: Sales $885,000; Costs $670,000; Depreciation $120,000. Tax rate is 35%. (OCF = EBIT(1-T) + Depreciation - ?NWC - ?Investment spending)

a. 165,500

b. $171,750

c. $175,500

d. $181,750

e. $185,500

Problem 2: Given the following information and assuming straight-line depreciation to zero, what is the payback period (undiscounted) for this project? Initial investment = $500,000; life = five years; cash inflow = $160,000 per year.

a. 3.12 years

b. 3.3 years

c. 3.91 years

d. 4.4 0years

e. The payback period is greater than the project's life.

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What is the payback period or undiscounted

Reference no: EM132663646

Reference no: EM132663646

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