Question

Worthington Inc. is considering a project that has the following cash flow data. What is the project's payback period?
Year 0 1 2 3
Cash flows- $500 $150 $200 $300

Answer 1

Answer:

The project's payback period is 2.5 years.

Explanation:

year       cash flow       comulative cash flow

0             -500                             -500

1               150                                -350

2               200                               -150

3                300

payback period = 2 years + 150-300

                           = 2.5 years

Therefore, The project's payback period is 2.5 years.