Question
In: Finance
Given the following cash flows for a proposed capital investment project, calculate the payback period. Year...
Given the following cash flows for a proposed capital investment project, calculate the payback period.
| Year | Cash Flow |
| 0 | -$40,000 |
| 1 | 15,000 |
| 2 | 15,000 |
| 3 | 15,000 |
| 4 | 15,000 |
| 5 | 10,000 |
| 6 | 10,000 |
Question 4 options:
|
5.50 years |
|
|
3.33 years |
|
|
4.33 years |
|
|
2.67 years |
Solutions
Expert Solution
Payback period= full years until recovery + unrecovered cost at the start of the year/cash flow during the year
= 2 years + ($40,000 - $30,000/ $15,000
= 2 years + $10,000/ $15,000
= 2 years + 0.67
= 2.67 years.
Hence, the answer is option d.
In case of any query, kindly comment on the solution
jeff jeffy answered 9 months agoRelated Solutions
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