LU - BTUAGE 11-12- 13 Option 2: Yoga Pants Today's Cash Outflows Initial investment $1,500,000...

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LU - BTUAGE 11-12- 13 Option 2: Yoga Pants Today's Cash Outflows Initial investment $1,500,000 Future Net Cash Flows Year 1 $500,000 Year 2 $500,000 Year 3 $500,000 Year 4 $500,000 Salvage Value $50,000 of Equipment 3. Calculate the payback period of yoga pants. Because the equipment will be sold in the year, the cash flows for each year will not be the same (they are the same for years 1-3, but not for yoar 4). Use the following setup to calculate the payback period for a project with unequal cash flows: Year Annual Net Cash Flow Cumulative Net Cash Flows 4. Calculate the NPV of polo shirts. a) Notice that for all four years the company will receive the same cash flow provided by the product. Use the PV of an annuity discount factor for this part of the calculation

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