Sarah Lindsay invested $300,000 in a project that pays her an even amount per year for 10 years. The payback period is 8 years. What are Sarah's yearly cash inflows from the project?

Question

Quizplus · Accepted Answer

The payback period is the time it takes for an investment to generate an amount of cash inflows equal to the initial investment. Since the payback period is 8 years and the total investment is $300,000, the yearly cash inflow is $300,000 / 8 = $37,500.

Sarah Lindsay Invested $300,000 in a Project That Pays Her