Given the following cash flows, assume that that cost of capital is 8%. Year Cash...
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Given the following cash flows, assume that that cost of capital is 8%.
Year Cash flow
0 (-) $225,000
1 $ 30,000
2 $ 75,000
3 $ 75,000
4 $ 50,000
5 $ 50,000
6 $ 50,000
.Compute the payback period:
| a) 3.50 | ||
| b) 3.67 | ||
| c) 3.75 | ||
| d) 3.90 | ||
| e) 4.00 |
About how many years will it take to grow your 401k balance by 400% assuming 8% annual returns for your portfolio? (Hint: Think CAREFULLY about TVM, and how money grows at (1+i) each year, where i = the rate of return. Thus, a 100% return doubles your money, 200% triples, etc.)
| a) 17 | ||
| b) 18 | ||
| c) 19 | ||
| d) 20 | ||
| e) 21 |
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