Bhimani, Horngren,
Datar and Rajan,
Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012
1b Payback period Year Net cash inflows Cumulative net cash inflows Cash investment yet to be recovered at end of year 0: Year 1 (start)
–
–
NKr3.000 1: Year 1 (end)
NKr0.100
NKr0.100 2.900 2: Year 2 (end)
2.100 2.200 0.800 3: Year 3 (end)
1.800 4.000
–
4: Year 4 (end)
1.800 5.800
– Payback period = 2 years +
NKr 0.800
NKr1.800
= 2.44 years
2 Other factors Aspelund might consider include
a Uncertainty over the predicted cash inflows for 2012 to 2015. A key factor here is the possible risk of injury to Monteiro or a diminishing of his soccer ability.
b Increase in number of championships Aalesund Fotballklubb wins.
c Increase in community pride that accompanies a championship team.
d Aspelund's own personal prestige of being president of a championship club.
e The effect the signing would have on Aalesund Fotballklubb’s ability to sign other players.
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