Question

Guerilla Radio Broadcasting has a project available with the following cash flows : Year Cash Flow 0 −$13,600 1 5,600 2 6,900 3 6,300 4 4,700 What is the payback period?

Answer 1

Answer:

It will take 3 years and 77 days to recover the initial investment.

Explanation:

Giving the following information:

Year Cash Flow 0 −$13,600 1 5,600 2 6,900 3 6,300 4 4,700

The payback period is the time required to recover the initial investment.

Year 1= 5,600 - 13,600= -8,000

Year 2= 6,900 - 8,000= -1,100

Year 3= 6,300 - 1,100= 5,200

To be more accurate:

(1,100/5,200)*365= 77

It will take 3 years and 77 days to recover the initial investment.