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Q5. Here are the projected cash flows from a proposed investment that costs $500, Describe he payback period for this investm
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Answer #1

payback period is the time required by the project to recover initial investment costs.

here in the given question initial cash flow = $500

cumulative cash flow of year 1 and 2 = $300

amount to be recover in year 3 = 500 - 300 = 200

so pay back period = 2 years + 200 / 500

= 2.4 years

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