Question

An investment of $6,000 produces a net annual cash inflow of $2,000 for each of 5 years. What is the payback period? a.2 years b.1.5 year c.Unacceptable d.3 years e.Cannot be determined.

Answer 1

Answer:

3 years

Explanation:

The payback period measures how long it takes for the amount invested in a project to be recovered from the projects cash flows .

Number of years = Investment / cash flows

$6000 / $2000 = 3 years

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