Question

A project has an initial cost of $58,625, expected net cash inflows of $11,000 per year for 9 years, and a cost of capital of 11%. What is the project's payback period? Round your answer to two decimal places.

Answer 1

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

Payback period = 5 + (7,375/11,000) = 5.6704545455

Payback period = 5.67 Years

Screenshot with formulas

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