What is the payback period of an investment that has a $5,000 initial investment, and then...
What is the payback period of an investment that has a $5,000 initial investment, and then $2,000 at (end) year one, $2000 at (end) year two, $1000 at (end) of year three, and $2000 at the (end) of year four.
A- 2% B- 2.8 years C- 4 years D- 3 years
Homework Answers
Ans D- 3 years
| Year | Cash Flow | Cumulative Cash Flow |
| 0 | -5000 | -5000 |
| 1 | 2000 | -3000 |
| 2 | 2000 | -1000 |
| 3 | 1000 | 0 |
| 4 | 2000 | 2000 |
| TOTAL | 2000 | |
| Payback Period = | 3 years | |
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