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A company invests $750,000 in a project with the following net cash flows: • Year 1:...

A company invests $750,000 in a project with the following net cash flows:
• Year 1: $43,000
• Year 2: $48,000
• Year 3: $55,000
• Year 4: $36,000
• Year 5: $74,000
• Year 6: $65,000
 
In what year does payback occur?
  • Year 4 
  • Year 6
  • After Year 6 
  • Year 5
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Answer #1

sum of 6 years cash flow

=43000+48000+55000+36000+74000+65000

=321000 which is less than the investment of 750000

so the answer is after year 6

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