Question

A project has an initial cost of $57,000, expected net cash inflows of $12,000 per year for 8 years, and a cost of capital of 13%. What is the project's payback period? Round your answer to two decimal places.

Answer #1

**Payback Period for
the Project**

- The Payback Period refers to the period in which the proposed project will generate the cash inflows to recover the Initial Investment costs.

- Payback period computes the number of years taken to recover the total amount of money invested in the project

Project's payback period is calculated as follows

Project's Payback Period = Initial Investment / Annual Cash Inflow

= $57,000 / $12,000

= 4.75 Years

**“Hence, the Project's Payback Period = 4.75
Years”**

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