The Golden Goose is considering a project with an initial cost of $46,700. The project will...

The Golden Goose is considering a project with an initial cost of $46,700. The project will produce cash inflows of $10,000 a year for the first two years and $12,000 a year for the following three years. What is the payback period?

Expert Solution

Year	Cash Flow	Accumulated Cash Flow
0	$ -46,700	$ -46,700
1	$ 10,000	$ -36,700
2	$ 10,000	$ -26,700
3	$ 12,000	$ -14,700
4	$ 12,000	$ -2,700
5	$ 12,000	$ 9,300


Payback period = 4 years + 2700/12000

=4.23 years

jeff jeffy answered 1 year ago

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