Project X has a cost of $100,000 and provides the following annual earnings: year 1 $35,000; year 2 $25,000; year 3 $175,000; and year 4 $10,000. Under the payback method, in which year is the investment recouped?

Question

Quizplus · Accepted Answer

$100,000 out, less year 1 (35,000), year 2 (25,000), and year 3 (175,000) means the payback point must have been reached in the third year of cash inflows.

Project X Has a Cost of $100,000 and Provides the Following