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mixer [17]
4 years ago
10

An investment project provides cash inflows of $615 per year for eight years. a. What is the project payback period if the initi

al cost is $1,750
Business
1 answer:
aksik [14]4 years ago
8 0

Answer:

It will take 3 years and 66 days to pay for the initial investment.

Explanation:

Giving the following information:

Cash flows= $615 for 8 years

Initial investment= $1,750

<u>The payback period is the time required to cover for the initial investment.</u>

<u></u>

Year 1= 615 - 1,750= -1,135

Year 2= 615 - 1,135= -520

Year 3= 615 - 520= 95

Exactly:

(95/520)= 0.18*365= 66

It will take 3 years and 66 days to pay for the initial investment.

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