An investment project provides cash inflows of $600 per year for eight years. Wh

Question

An investment project provides cash inflows of $600 per year for eight years. What is the project payback period if the initial cost is $1,725? What if the initial cost is $3,350? What if it is $5,000?

What is the project payback period if the initial cost is $1,725? (Enter 0 if the project never pays back. Round your answer to 2 decimal places. (e.g., 32.16))

What is the project payback period if the initial cost is $3,350? (Enter 0 if the project never pays back. Round your answer to 2 decimal places. (e.g., 32.16))

What is the project payback period if the initial cost is $5,000? (Enter 0 if the project never pays back. Round your answer to 2 decimal places. (e.g., 32.16))

An investment project provides cash inflows of $600 per year for eight years. What is the project payback period if the initial cost is $1,725? What if the initial cost is $3,350? What if it is $5,000?

Explanation / Answer

Hi,

Please find the detailed answer as follows;

Part A:

Payback Period = Initial Investment/Annual Cash Inflows = 1725/600 = 2.88 Years

Part B:

Payback Period = Initial Investment/Annual Cash Inflows = 3350/600 = 5.58 Years

Part C:

Payback Period = Initial Investment/Annual Cash Inflows = 5000/600 = 8.33 Years

Thanks.

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