Question

In: Economics

If a project costs $90,000 and is expected to return $30.000 annually, how long does it...

If a project costs $90,000 and is expected to return $30.000 annually, how long does it take to recover the initial investment? what would be the discounted payback period at i = 20%?

Expert Solution

Investment = - $ 90,000

Annual income = $ 30,000

Discount rate = 20%

Let us assume it takes n number of years to recover the amount.

Taking log on both sides we get

Number of years to recover invested capital = 5.025 years

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Rahul Sunny answered 2 years ago

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