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An investment project provides cash inflows of $675 per year for 8 years. What is the...

An investment project provides cash inflows of $675 per year for 8 years. What is the project payback period if the initial cost is $1,700?

Solutions

Expert Solution

Solution: The Answer is 2.52 Years [Approx]

Calculation:

Year Cash Inflow Accumulated Cash Flow
1 $                           675 $                                       675
2 $                           675 $                                   1,350
3 $                           675 $                                   2,025
4 $                           675 $                                   2,700
5 $                           675 $                                   3,375
6 $                           675 $                                   4,050
7 $                           675 $                                   4,725
8 $                           675 $                                   5,400

1) Project Payback Period = 2 Years + [2025-1700] / 675 = 2 Years + 2.52 Years

ekkarill92 answered 2 years ago
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