Falcons Investments
Falcons Investments is considering two projects: $\begin{array}{lll}&\text { Project I } &\text { Project II }\
\text { Initial investment } & \$ 60,000 & \$ 60,000 \
\text { Cash inflow Year 1 } & \$ 30,000 & \$ 15,000 \
\text { Cash inflow Year 2 } & \$ 30,000 & \$ 15,000 \
\text { Cash inflow Year 3 } & \$ 30,000 & \$ 30,000 \
\text { Cash inflow Year 4 } & \$ 30,000 & \$ 70,000 \
\text { Cash inflow Year 5 } & \$ 30,000 & \$ 70,000
\end{array}$
-Refer to Falcons Investments. What is the payback period for Project II?

Question

Quizplus · Accepted Answer

The payback period is the time it takes for the initial investment to be recovered from the cash inflows. For Project II, the cumulative cash inflows are: Year 1: $15,000, Year 2: $30,000, Year 3: $60,000. By the end of Year 3, the initial investment of $60,000 is fully recovered, so the payback period is 3.0 years.

Falcons Investments Falcons Investments Is Considering Two Projects -Refer to Falcons Investments

Falcons Investments
Falcons Investments Is Considering Two Projects -Refer to Falcons Investments