Essay > Words: 1893 > Rating: Excellent > Buy full access at $1
Year
Sale Volume
1
$ 70,000
2
$ 80,000
3
$ 100,000
4
$ 85,000
5
$ 75,000
PDA
Prototype
$ 8,500,000
Marketing
$ 2,500,000
Selling Price
$ 250
Variable Cost
$ 86
Fixed Cost
$ 2.4 million per year
Machine Cost
$ 10,000,000
First Year
Sales
Less: Variable
70,000 6,020,000
Fixed Cost
Net Income before tax
Less: Tax
Net Income after tax
$ 5,448,000
Depreciation Expenses
Cash Flow
$ 7,448,000
Second Year
Sales
80,000 20,000,000
Less: Variable
80,000
Fixed Cost
2,400,000
Net Income before tax
Less: Tax
Net Income after tax
$ 6,432,000
Depreciation Expenses
Cash Flow
$ 8,432,000
Third Year
Sales
100,000 25,000,000
Less: Variable
Fixed Cost
2,400,000
Net Income before tax
Less: Tax
$ 5,600,000
Net Income after tax
8,400,000
Depreciation Expenses
Cash Flow
$ 10,400,000
Fourth Year
Sales
85,000
Less: Variable
85,000 7,310,000
Fixed Cost
2,400,000
Net Income before tax
Less: Tax
Net Income after tax
$ 6,924,000
Depreciation Expenses
Cash Flow
$ 8,924,000
Fifth Year
Sales
75.000 18,750,000
Less: Variable
6,450,000
Fixed Cost
2,400,000
Net Income before tax
Less: Tax
Net Income after tax
$ 5,940,000
Depreciation Expenses
Cash Flow
$ 7,940,000
Year
Cash Flow
1
$ 7,448,000
2
$ 8,432,000
3
$ 10,400,000
4
$ 8,924,000
5
$ 7,940,000
Pitfalls of using playback Period
It has insufficient genuine certainties, which pick the length of best payback period? Nobody from different does – it is arranged by setting one venture opportunity against an alternate. Money streams are viewed as either prepay back or post-payback, however the last have a tendency to be disregarded. Payback makes no note of the impact on business benefit. Its sole concern is money stream.
The genuine downside of payback period is it doesn’t depend on the period estimation.............
Type: Essay || Words: 1893 Rating || Excellent
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