An investment project provides cash inflows of $690 per year for eight years. Wh

Question

An investment project provides cash inflows of $690 per year for eight years.

What is the project payback period if the initial cost is $1,475? (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 $3,500? (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 $5,700? (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 $690 per year for eight years.

Explanation / Answer

Case 1 payback period:

= $1,475÷$690

= 2.14 years

Case 2 payback period:

= $3,500÷$690

= 5.07 years

Case 3 payback period:

= $5,700÷$690

= 8.26 years (Payback not achieved)

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