Homework Answers
Payback period is the number of years it takes to re-earn the invested amount.
Invested amount = $2,600
Per year cash in flow = $1,700
Year 1 Cash Inflow = $1,700
Amount more required to complete payback = $2,600 - $1,700 = $900
Fraction of year 2 = $900/$1700 = 0.53 year
Payback = 1 + 0.53 year = 1.53 year
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