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Capital Budgeting Models

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Stern Associates is considering a project that has the following cash flow data. What is the project's payback?

Year 0 1 2 3 4 5
Cash flows -$1,100 $300 $310 $320 $330 $340

If you have a 3 year loan that requires $1,000 payments each year at 7% annual interest rate what would be the present value of the loan?

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Solution Summary

Solutions to given problems depict the methodology to calculate payback period and present value of a loan.

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Please refer attached file for better clarity of tables.

Problem 1

Year Cash Flow Cumulative cash flow
1 300 300
2 310 610
3 320 ...

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  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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