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calculating payback [ lo2] an investment project provides cash inflows of $835 per year for eight years. what is the project payback period if the initial cost is $1,900? what if the initial cost is $3,600? what if it is $7,400?

Respuesta :

Part a: The payback period for the initial cost of $1900 is 2.27 years

Part b: The payback period for the initial cost of $3600 is 4.31 years

Part c: The payback period for the initial cost of $7400 is 8.86 years

Part a:

Project initial cost = $1900

Cash inflow = $835

Project payback period = Initial cost/Cash inflow

= 1900/835 = 2.27 years

Part b:

Project initial cost = $3600

Cash inflow = $835

Project payback period = Initial cost/Cash inflow

= 3600/835 = 4.31 years

Part c:

Project initial cost = $7400

Cash inflow = $835

Project payback period = Initial cost/Cash inflow

= 7400/835 = 8.86 years

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