Consider a project with an initial outlay of $891,000 and yearly cash flows as follows: 200,000,...
Consider a project with an initial outlay of $891,000 and yearly cash flows as follows: 200,000, -137,000, 456,000, 367,000, 5,000, 61,000, 89,000, 19,000, 871,700, 23,000, and 61,000. Obtain the classical payback period, assuming 11% cost of capital. (PLEASE EXPLAIN WITHOUT USING EXCEL)
a. 5
b. 6
c. 8
d. 10
e. None of the above
Homework Answers
ONLY WRITTEN IN EXCEL, NO EXCEL FUNCTION IS USED. THANK YOU
PAYBACK PERIOD IS THE PERIOD REQUIRED TO RECOVER
INVESTMENT. CUMULATIVE CF IS ZERO IN YEAR 5, THAT IS END OF 5TH
YEAR, WE WILL ABLE TO RECOVER INVESTMENT, SO PAYBACK PERIOD IS 5
YEARS.
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