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PAYBACK PERIOD Project L costs $65,000, its expected cash inflows are $14,000 per year for 11...

PAYBACK PERIOD

Project L costs $65,000, its expected cash inflows are $14,000 per year for 11 years, and its WACC is 9%. What is the project's payback? Round your answer to two decimal places.

__ years

Solutions

Expert Solution

Calculation of payback period :
Time Amount Cumulative
                  -   (65,000.00)      (65,000.00)
             1.00     14,000.00      (51,000.00)
             2.00     14,000.00      (37,000.00)
             3.00     14,000.00      (23,000.00)
             4.00     14,000.00        (9,000.00)
             5.00     14,000.00           5,000.00
             6.00     14,000.00        19,000.00
             7.00     14,000.00        33,000.00
             8.00     14,000.00        47,000.00
             9.00     14,000.00        61,000.00
           10.00     14,000.00        75,000.00
           11.00     14,000.00        89,000.00
Payback Period= 4+9000/14000
Payback Period= 4.64 years

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