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21 November, 15:04

Payback Period Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. Colby Hepworth has just invested $400,000 in a book and video store. She expects to receive a cash income of $120,000 per year from the investment. Kylie Sorensen has just invested $1,400,000 in a new biomedical technology. She expects to receive the following cash flows over the next 5 years: $350,000, $490,000, $700,000, $420,000, and $280,000. Carsen Nabors invested in a project that has a payback period of 4 years. The project brings in $960,000 per year. Rahn Booth invested $1,300,000 in a project that pays him an even amount per year for 5 years. The payback period is 2.5 years. Required: 1. What is the payback period for Colby

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  1. 21 November, 15:07
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    3 years and 4 months

    Explanation:

    Colby payback period = Investment in book and store / Annual cash income = $400,000 / $120,000 = 3.33 years = 3 years and (0.33 * 12) months = 3 years and 4 months.

    Therefore, the payback period for Colby is 3 years and 4 months.
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