(a) What is the approximate number of years you would have to sell a mobile phone app to break even if income is estimated to be $50,000 per year, expense is $15,000 per year, your initial invest­ment is $280,000, and your MARR is 10% per year? (b) Find the exact payback period using a spreadsheet function.

What will be an ideal response?


(a) Develop the W relation and solve for np

-280,000(A/P,10%,np) + 50,000 – 15,000 = 0
(A/P,10%,np) = 0.125

From 10% tables, n ? 17 years

(b) Spreadsheet function: = NPER(10%,35000,-280000) displays 16.9 years

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