Year Expected net cash flows 0 -90 1 60 2 40 3 20 The project's cost...

Question

Question

The project's cost of capital is 10%.

What is the project's payback period?

A) 1.7 years

B) 1.2 years

C) 3 years

business finance

Answer 1

Answer #1

Payback period=Last period with a negative cumulative cash flow+(Absolute value of cumulative cash flows at that period/Cash flow after that period).

=1+(30/40)

= 1.7 years(Approx).

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Answer 2

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