Find the payback period for the following project. Year CF 11 11 0 11-50 30 2...

Question

Question

business finance

Answer 1

Answer #1

The payback period of the project will be calculated without taking in any time value of money consideration.

payback period will be the period in which the initial cash flow will be recovered from the project.

It can be seen that the initial cash outflow is 50.

Cash inflows in first 2 years=[30+14]= 44

Cash inflow in third year is 10 but we just need 6 to arrive at the overall payback period.

Payback period= 2 Years+(50-44)/10

= 2 Years+(6/10)

= 2.6 years.

Answer 2

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