3. Project Selection (Financial models) (3 pts.) (i) Even Cash Flows (1 pt.) A company plans invest $10 million in a project. The project leader expects $2.5 million per year for 8 years. Calculate payback period of the project.

4 years

Explanation:

Payback calculates the amount of time it takes to recover the amount invested in a project from it cumulative cash flows

Payback period = Amount invested / cash flow

$10 million / $2.5 million = 4 years

the first one $24,630

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.