An investment project provides cash inflows of $745 per year for eight years a.W

Question

An investment project provides cash inflows of $745 per year for eight years a.What is the project payback period if the initial cost is $1,700? (Enter O if the project never pays back. Round your answer to 2 decimal places, e.g., 32.16.) never pays back. Round your answer to 2 decimal places, e.g., 32.16.) never pays back. Round your answer to 2 decimal places, e.g., 32.16.) b.What is the project payback period if the initial cost is $3,300? (Enter O if the project c. What is the project payback period if the initial cost is $6,100? (Enter O if the project a. Payback period b.Payback period c. Payback period years years years

Explanation / Answer

a. Payback period = Investment / Annual Cash Inflows

= $ 1,700 / $ 745

= 2.28 Years

b. Payback period = Investment / Annual Cash Inflows

= $ 3,300 / $ 745

= 4.43 years

c. Payback period = Investment / Annual Cash Inflows

= $ 6,100 / $ 745

= 8.19 Years

Since payback period is greater than 8 years, the inflows never payback the outflow amount.

Hence the correct answer is :

a. Payback period 2.28 Years b. Payback period 4.43 Years c. Payback Period 0 years

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