Question

Associates is considering a project that has the following cash flow data. What is the project's payback?

Year 0 1 2 3 4 5

Cash flows -$2,300 $500 $520 $540 $560 $580

Answer 1

Payback period is the time within cost of project is recoverde back.
Year	Cash flow	Cumulative cash flow
0	$       -2,300	$    -2,300
1	500	-1,800
2	520	-1,280
3	540	-740
4	560	-180
5	580	400
Payback period		=	4+(180/580)
		=	4.31	Years