Question

An investment project provides cash inflows of $615 per year for eight years. a. What is the project payback period if the initial cost is $1,750

Answer 1

It will take 3 years and 66 days to pay for the initial investment.

Step-by-step explanation:

Giving the following information:

Cash flows= $615 for 8 years

Initial investment= $1,750

The payback period is the time required to cover for the initial investment.

Year 1= 615 - 1,750= -1,135

Year 2= 615 - 1,135= -520

Year 3= 615 - 520= 95

Exactly:

(95/520)= 0.18*365= 66

It will take 3 years and 66 days to pay for the initial investment.