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Project L costs $70,000, its expected cash inflows are $10,000 per year for 9 years, and...

Project L costs $70,000, its expected cash inflows are $10,000 per year for 9 years, and its WACC is 10%. What is the project's payback? Round your answer to two decimal places.

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Expert Solution

Calculation of payback period:
Time Amount Cumulative
                                                                                      -         (70,000.00)                                           (70,000.00)
                                                                                 1.00         10,000.00                                           (60,000.00)
                                                                                 2.00         10,000.00                                           (50,000.00)
                                                                                 3.00         10,000.00                                           (40,000.00)
                                                                                 4.00         10,000.00                                           (30,000.00)
                                                                                 5.00         10,000.00                                           (20,000.00)
                                                                                 6.00         10,000.00                                           (10,000.00)
                                                                                 7.00         10,000.00                                                             -  
                                                                                 8.00         10,000.00                                              10,000.00
                                                                                 9.00         10,000.00                                              20,000.00
                                                                               10.00         10,000.00                                              30,000.00
                                                                               11.00         10,000.00                                              40,000.00
Payback period is 7 years

jeff jeffy answered 2 years ago
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