An investment project provides cash inflows of $705 per year for eight years. Wh

Question

An investment project provides cash inflows of $705 per year for eight years.

What is the project payback period if the initial cost is $1,450? (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 $3,600? (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 $5,800? (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 $1,450? (Enter 0 if the project never pays back. Round your answer to 2 decimal places, e.g., 32.16.)

Explanation / Answer

1. Calculation of Payback Period:

Payback Period = Initial Cost / Annual Cash in flows

=1450 / 705

= 2.06 Years

2. Calculation of Payback Period:

Payback Period = Initial Cost / Annual Cash in flows

=3600 / 705

= 5.11 Years

3. Calculation of Payback Period:

Payback Period = Initial Cost / Annual Cash in flows

=5800 / 705

= 8.23 Years

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