Answer:
1. 3.33 years
2. 2.8 years
3. $3,840,000
4. $520,000
Explanation:
Payback period calculates the amount of time it takes to recover the amount invested in a project from its cumulative cash flows
1. payback period = amount invested / cash flow = $400,000 / $120,000 = 3.33 years
2. Amount invested = $-1,400,000
Amount recovered in year 1 = $-1,400,000 + $350,000 = $-1,050,000
Amount recovered in year 2 = $-1,050,000 + $490,000 = $-560,000
Amount recovered in year 3 = $-560,000 + $700,000 = $140,000
the amount invested is recovered in 2 years + 560,000/ $700,000 = 2.8 years
3. payback period = amount invested / cash flow
4 = amount invested / $960,000
amount invested = $3,840,000
4. payback period = amount invested / cash flow
2.5 years = $1,300,000 / / cash flow
Cash flow = $520,000
