Question

An investment project has the following cash flows:_________.

CF0 = -1,000,000; C01 – C08 = 200,000 each
If the required rate of return is 12%, payback period of this project is:________.

Answer 1

Answer:5 years

Step-by-step explanation:

Answer 2

the payback period is 5 years

Step-by-step explanation:

The computation of the payback period is shown below;

Payback period = initial investment ÷ annual cash flows

= $1,000,000 ÷ $200,000

= 5 years

hence, the payback period is 5 years

We ignored the required rate of return as it is considered in the discounted payback period

We simply applied the above formula so that the correct value could come

And, the same is to be considered