Worthington Inc. is considering a project that has the following cash flow data. What is the project's payback?
$\begin{array} { l c c c c }
\text { Year } & 0 & 1 & 2 & 3 \
\text { Cash flows } & - \$ 500 & \$ 150 & 200 & \$ 300
\end{array}$

Question

Worthington Inc. is considering a project that has the following cash flow data. What is the project's payback?
 $\begin{array} { l c c c c } 
\text { Year } & 0 & 1 & 2 & 3 \
\text { Cash flows } & - \$ 500 & \$ 150 & 200 & \$ 300
\end{array}$

Quizplus · Accepted Answer

$\begin{array} { l c c c c } 
\text { Year } & 0 & 1 & 2 & 3 \
 \text { Cash flows } & - \$ 500 & \$ 150 & \$ 200 & \$ 300 \
\text { Curnulative CF } & - \$ 500 & - \$ 350 & - \$ 150 & \$ 150 \
\text { Payback = 2.50 years } & - & - & - & 2.50
\end{array}$ 
Payback = last year before cum CF turns positive + abs. val. last neg. cum CF/CF in payback year.

Worthington Inc Year 0123 Cash flows −$500$150200$300\begin{array} { l c c c c } \text { Year } & 0 & 1 & 2 & 3 \\\text { Cash flows } & - \$ 500 & \$ 150 & 200 & \$ 300\end{array} Year Cash flows ​0−$500​1$150​2200​3$300​

Worthington Inc $\begin{array} { l c c c c } \text { Year } & 0 & 1 & 2 & 3 \\\text { Cash flows } & - \$ 500 & \$ 150 & 200 & \$ 300\end{array}$