An investment project provides cash inflows of $645 per year for eight years. Wh

Question

An investment project provides cash inflows of $645 per year for eight years. What is the project payback period if the initial cost is $1,550? What if the initial cost is $3,300? What if it is $5,400?

What is the project payback period if the initial cost is $1,550? (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 $3,300? (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 $5,400? (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 $1,550? (Enter 0 if the project never pays back. Round your answer to 2 decimal places. (e.g., 32.16))

Explanation / Answer

Payback period = Initial cost÷Cash flows per year

If initial cost is $1,550:

= $1,550÷$645

= 2.4 years

If initial cost is $3,300:

= $3,300÷$645

= 5.12 years

If initial cost is $5,400 payback is 0

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