Determine the cash payback period. Round to one decimal place.

A project has estimated annual net cash flows of $95,200. It is estimated to cost $580,720. Determine the cash payback period. Round to one decimal place.

Solutions

Expert Solution

Cash payback method : The anticipated time frame needed to recoup the cost of the investment is known as the cash payback period. The management uses it as one of their capital investment methods to assess long-term investments.

Cash payback period = Initial cost / Annual net cash inflow

Calculation of Cash payback period

Cash payback period = Initial cost / Annual net cash inflow

=$580,720 / $95,200

=6.1 Years

The initial cost of the investment in this instance was $580,720, and the annual net cash inflow was $95,200. The cash payback period is determined by dividing the initial cost by the yearly net cash inflow when the annual net cash inflows are equal.

balaji rao answered 1 year ago

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