a project that costs $2,400 to install will provide annual cash flows of $590 for the next 5 years. the firm accepts projects with payback periods of less than 5 years. a. what is this project's payback period?

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ddvinks4911 ddvinks4911

25-10-2022
Business

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a project that costs $2,400 to install will provide annual cash flows of $590 for the next 5 years. the firm accepts projects with payback periods of less than 5 years. a. what is this project's payback period?

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rafikiedu05 rafikiedu05 · Answer 1 · 2022-11-04T08:35:31-04:00

Payback Period = ( Last Year with a Negative Cash Flow ) + [( Absolute Value of negative Cash Flow in that year)/ Total Cash Flow in the following year)]

= 4+ ( 40 / 590)

= 4.068 Years

The project's payback period is 4.068 Years.

The payback duration is defined as the range of years required to recover the precise cash funding. In distinct phrases, it's miles the time period on the prevention of which a gadget, facility, or different funding has produced sufficient internet sales to recover its funding costs.

The Payback period suggests how long it takes for a business enterprise to recoup funding. This kind of assessment allows firms to evaluate opportunity investment opportunities and determine a challenge that returns its funding within the shortest time if that criteria is vital to them.

Learn more about payback here: https://brainly.com/question/23149718

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