In: Finance
While considering the given information, it is found out that the project is giving a net cash inflow of $72,000 during the life of the project. If the company is having no cost of capital, the project can be accepted
Calculation of pay back period of the project
Pay back period = 2 + (26,400 / 27,800) = 2.95 years
If the company is having a cost of capital, the Free cash flow has to be discounted with discounting factor of concerned year (1+r)^n where n= year, and r=cost of capital