Question

4:02 PM Question Status: 22.2. 22.22. 2221 A smal town in Ohio is considering the purchase of a new parking system that would enhance the collection of parking foes while providing additional convenience to shoppers. The hardware requires an immediate investment of $750. The town estimates that the new system will create an annual cash flow of 283 to be received at the end of each year, beginning in one year for consecutive years. And, in addition, the project will produce a terminal cash flow in year 6 of $383. What is the payback in years of the computer package? Years Place your answer in number of years, as an integer

Answer 1

rate positively ..

	year	Cash flow	Cumulative cash flow
	0	-750	(750)
	1	283	(467)
	2	283	(184)
	3	283	99
	4	283	382
	5	666	1,048
Payback period =		2+184/283
		2.65
therefore answer =		3	year