Figure 13-4
A capital investment project requires an investment of £60,000 and has an expected life of four years. Annual cash flows, which occur evenly throughout the year, are expected to be as follows:
-Refer to Figure 13-4. Payback for the project is

Question

Figure 13-4
A capital investment project requires an investment of £60,000 and has an expected life of four years. Annual cash flows, which occur evenly throughout the year, are expected to be as follows: 
-Refer to Figure 13-4. Payback for the project is

Quizplus · Accepted Answer

Payback is the time it takes to recover the initial investment. In this case, the initial investment is $10,000. The project generates $4,000 in cash flow in year 1, $3,000 in cash flow in year 2, and $3,000 in cash flow in year 3. Therefore, the payback period is 2.25 years.

Figure 13-4 a Capital Investment Project Requires an Investment of £60,000 and £60,000