alleryStart learning →A Rs 6,00,000 project gives Rs 1,50,000 net cash flow a year. Payback period?
A4 years
B3 years
C5 years
D6 years
Answer & Solution
Correct answer: A. 4 years
Payback = amount invested / annual net cash flow = 6,00,000 / 1,50,000 = 4 years.
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Which measures do economists prefer over payback for return?Rs 9,00,000 is invested and net cash flow is Rs 1,80,000 a year. Payback?A: profit Rs 40,000 on average investment Rs 2,00,000. B: Rs 54,000 on Rs 3,60,000. HigherCost Rs 12,00,000 and scrap Rs 2,00,000. Average investment under ARR?Cost Rs 3,00,000, scrap Rs 60,000, 4 years, total profit Rs 1,44,000. ARR?Which goal underlies capital budgeting in corporate finance?Capital budgeting mainly concerns which type of spending?Companies create value when their return on capital is above what?