Question

Wayne Company is considering a long-term investment project called ZIP. ZIP will require an investment of $128,000. It will have a useful life of 4 years and no salvage value. Annual cash inflows would increase by $80,000, and annual cash outflows would increase by $40,300. Compute the cash payback period. (Round answer to 2 decimal places, e.g. 10.50.)

Cash payback period : Question 6 Wayne Company is considering a long-term investment project called ZIP. ZIP will require an investment of $128,000. t wll have a useful life of 4 years and no salvage value. Annual cash inflows would increase by $80,000, and annual cash outflows would increase by $40,300. Compute the cash payback period. (Round answer to 2 decimal places, e.g. 10.50.) Cash payback period years

Answer 1

Net cash flow per year = Cash inflow - Cash outflow

= $80,000 - $40,300 = $39,700

Cash payback period = Initial investment / Net cash flow per year

= $128,000 / $39,700

= 3.22 years