Question

Park Co. is considering an investment that requires immediate payment of $30,500 and provides expected cash inflows of $11,000 annually for four years. What is the investment's payback period? Payback Period Choose Numerator: Choose Denominator: Payback Period Payback period

Answer 1

payback period numerator 2 denominator = payback period immediate cash payment/ annual cash inflow Ir payback period $ 30,500 1. $ 11,000 2.77 years

2a cash flow select chart amount * PV factor = present value annual cash flow present value of an annuity of 1 $ 8,800.00 * 3.5460 = $ 31,204.80 immediate cash payment $ 30,490.00 net present value $ 714.80 present value factor internal rate of return 3.4648 6%

annual depreciation = ($285,000 - $33,000)/5 = $50,400 annual cash inflow = $27,200 + $50,400 = $77,600 payback period numerator denominator = payback period immediate cash payment / annual cash inflow = payback period $285,000 $ 77,600 3.67 years

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