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13 June, 00:51

2. Consider a project which requires $1000 of initial investment and generates the next cash flows $300, $300 and $500 over the next three years. When the project is profitable?

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  1. 13 June, 00:55
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    The project is profitable after 3.8 years

    Explanation:

    Year Cash Flow Cumulative

    0 - $1000 - $1000

    1 $300 - $700

    2 $300 - $400

    3 $500 $100

    400/500 0.8

    3.8 years
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