Answer:
The Payback Period from non discounted cash flows is 2 Years and 8 months
Step-by-step explanation:
With an initial outlay of $1,000,000
and Cash inflows for 4 years consecutively of $500,000 + $300,000 + $300,000 + $300,000
Pay back Period = the Period where Initial Outlay minus Cash Inflows equal Zero
= 1,000,000 - 500,000 (yr 1) - 300,000 (yr 2) - 200,000 (2/3 of Year 3) = 0
Pay back Period therefore is equal to 2 years & 8 months.
