An investment project provides cash inflows of $840 per year for eight years. Wh

Question

An investment project provides cash inflows of $840 per year for eight years.

What is the project payback period if the initial cost is $3,200? (Enter 0 if the project never pays back. Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16))

What is the project payback period if the initial cost is $4,800? (Enter 0 if the project never pays back.Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16))

What is the project payback period if the initial cost is $7,300? (Enter 0 if the project never pays back.Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16))

An investment project provides cash inflows of $840 per year for eight years.

Explanation / Answer

a.

Payback = 3200/840 =3.81 years

b.

Payback = 4800/840= 5.71 years

c.

Since, total cash inflows in 8 years will be - 8*840= 6720

If initial cost is 7300 then project never pays back.

Therefore,

payback = 0

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