Question

Norbert is considering a project with an initial value of $125,000. Cash inflows during the next...

Norbert is considering a project with an initial value of $125,000. Cash inflows during the next 6 years will be $35,000 per year. Given this information, provide the project's payback.
Select one:
A. 3.57 years
B. 5.17 years
C. 4.17 years
D. 4.57 years

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Homework Answers

Answer #1

Payback period = The year in which the cumulative cash flow was last negative + (the positive value of the cumulative cash flow in that year) / (cash flow in the next year)

Payback period = 3 + 20,000/35,000

Payback period = 3.5714285714

Payback period = 3.57 years

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