Question

A project that costs $23,500 today will generate cash flows of $9,300 per year for seven years. What is the project's payback period?

Answer 1

It will take 3 years and 192 days to cover for the initial investment.

Step-by-step explanation:

Giving the following information:

Initial investment= $23,500

Cash fow= $9,300

Time period= 7 years

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

Year 1= 9,300 - 23,500= - 14,200

Year 2= 9,300 - 14,200= - 4,900

Year 3= 9,300 - 4,900= 4,400

To be more accurate:

(4,900/9,300)*365= 192

It will take 3 years and 192 days to cover for the initial investment.