Question

An investment project provides cash inflows of $620 per year for 14 years. a. What is the project payback period if the initi
b. What is the project payback period if the initial cost is $3,782? 6.10 years 6.16 years 5.79 years 6.22 years 5.92 years
c. What is the project payback period if the initial cost is $9,300? 3.01 years Never 4.95 years 5.25 years 1.35 years
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Answer #1

Payback period = Initial cost/Annual inflows

When cost = 1,240

Payback period = 1240/620

= 2 years

When cost = 3782

Payback period = 3782/620

= 6.1 years

Cost = 9,300

Period = 9,300/620

= 15 years

i.e. NEVER, since project is for 14 years

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