value 10.00 points What is the payback period for the following set of cash flows? (Round...

Question

Question

value 10.00 points What is the payback period for the following set of cash flows? (Round your answer to 2 decimal places, e.

Answer 1

Answer #1

First calculate the cumulative cash flows from year 0 :-

The Payback Period (orP P) is X + Y/Z

· In this calculation:

· X = is the last time period where the cumulative discounted cash flow (CCF) was negative

· Y = is the absolute value of the CCF at the end of that period X without negative symbol

· Z = is the value of the DCF in the next period after X

PP = 3 years + 500 / 1600

= 3 years + 0.3125

Payback period = 3.3125 years = 3.31 years

Answer 2

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