Question

A project has the following cash flows. What is the payback period? Year 0 1 2 3 4 cash flow -$14500 $2200 $4800   $6500 $7500

A project has the following cash flows. What is the internal rate of return? Year 0 1 2 3 Cash flows -$89300 $32900 $64200 $5800

A project has the following cash flows. What is the payback period? Year 0 1 2 3 4 Cash flow -$28000 $11600 $11600 $6500 $6500

And how to solve this kind of problems with a financial calculator? (BA II)

Answer 1

Payback period= full years until recovery + unrecovered cost at the start of the year/cash flow during the year

1.Payback period= 3 years + $1,000/ $7,500

                              = 3 years + 0.13

                              = 3.13 years.

2. Payback period= 1 year + $56,400/ $64,200

                                  = 1 year + 0.88

                                  = 1.88 years.

3.Payback period= 2 years + $4,800/ $6,500

                                 = 2 years + 0.74

                                 = 2.74 years.

In case of any query, kindly comment on the solution.