July Ltd is inteding to purchase a second hand T652 airplane at a cost of 20 million. A further 2,5 million will be expe
Posted: Fri Jul 01, 2022 8:29 am
July Ltd is inteding to purchase a second hand T652airplane at a cost of 20 million. A further 2,5 million will beexpended on the T652 to refurbish the interior before the planegoes into service. July Ltd will operate the plane for itsuseful life, which is 10 years. T the end of the 10 year period theT652 is expected to have a resale value of 2 million. It is alsoestimated that the T652 would have a resale value after five yearsof 6.5 million.
By keeping the plane inservice July Ltd is expectedto produce net cash inflows of 3 million in each year.
Assuming the cash flows are expected to occur evenlyduring each year, what will be the payback period?
A. 5.0 years
B. 5.5 years
C. 7.0 years
D. 7.5 years
By keeping the plane inservice July Ltd is expectedto produce net cash inflows of 3 million in each year.
Assuming the cash flows are expected to occur evenlyduring each year, what will be the payback period?
A. 5.0 years
B. 5.5 years
C. 7.0 years
D. 7.5 years