An investment project provides cash inflows of $1,350 per year for eight years. a. What is the project payback period if the ini

Question

3 years ago

9

tial cost is $4,250

1 answer:

sleet_krkn [62] · Answer 1 · 2022-09-20T03:01:53+03:00

Answer:

It will take 3 years and 55 days to cover the initial investment.

Explanation:

Giving the following information:

Cash flows= $1,350

Initial investment= $4,250

The payback period is the time required to cover the initial investment:

Year 1= 1,350 - 4,250= -2,900

Year 2= 1,350 - 2,900= -1,550

Year 3= 1,350 - 1,550= -200

Year 4= 1,350 - 200= 1,150

To be more accurate:

(200 / 1,350)= 0.15*365= 55 days

It will take 3 years and 55 days to cover the initial investment.