Question

Metlock Corp. is considering the purchase of a piece of equipment that costs $10000. Projected net annual cash flows over the project’s life are: Year Net Annual Cash Flow 1 $4000 2 6000 3 7000 4 9000 The cash payback period is 2.00 years. 2.60 years. 2.04 years. 2.36 years.

Answer 1

2.0 year

Step-by-step explanation:

Payback is the time required for a project to repay its initial investments.

For this project: Initial investment is $ 10,000

Total

Year 1: Net inflows: $ 4,000 $ 4000.00

Year 2: Net inflows: $ 6,000 $ 10,000.00

Payback two years