Answer:
Payback period
Project AA= 2 years 4.8 months
Project BB = 2 years 3.8 months
Project CC = 2 years 1.3 months
Explanation:
Project AA
Cash inflow for after 2 years = 7000 + 9000 =16000
Balance to recover initial cost = 22,000 -16000 = 6,000
Payback period
= 2 years + (6000/15000)× 12 months
= 2 years 4.8 months
Project BB
Cash inflow for after 2 years = 9500 +9500 =19,000
Balance to recover initial cost = 22,000 -19000 = 3,000
Payback period
= 2 years + (3000/9,500)× 12 months
= 2 years 3.8 months
Project CC
Cash inflow for after 2 years = 11,000 + 10,000 =21,000
Balance to recover initial cost = 22,000 -21,000 = 1,000
Payback period
= 2 years + (1,000/9,000)× 12 months
= 2 years 1.3 months
