What is the payback period of the investment


Problem 1) Payback Method

The company paid $50,000 cash for a capital investment. The company expects the investment to generate net cash inflows of $8,400 per year. What is the payback period of this investment?

Problem 2) Uncertain Expected Cash Flows

The company is considering an investment that costs $785,000 today and has a salvage value in 10 years of $137,714, but the company is not sure how much net annual cash inflow will be provided by the investment. The company has a discount rate of 7%. Compare the net amount of annual cash inflow required to break even.

Solution Preview :

Prepared by a verified Expert
Finance Basics: What is the payback period of the investment
Reference No:- TGS02036189

Now Priced at $20 (50% Discount)

Recommended (97%)

Rated (4.9/5)