Question

Park Co. is considering an investment that requires immediate payment of $29,500 and provides expected cash inflows of $12,80

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Answer #1

CALACULATION OF PAYBACK PERIOD :

PAYBACK PERIOD is the period in which we can recover the actual investment that we had put in earlier, in the form of some inflows.

PayBack Period

= Cost of investment ÷ Expected cash inflows

= $29500 ÷ $12800

= 2.30

It means the investment's payback period is 2 years, 3 months.

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