A company is considering two projects.

What is the payback period for Project II?

Name: A company is considering two projects. What is the payback period for Project II?
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Question

A company is considering two projects. 
 
 What is the payback period for Project II?

Quizplus · Accepted Answer

Adding the amount of original investment recovered in three years from Project II = Cash inflow Year 1 + Cash inflow Year 2 + Cash inflow Year 3
= $60,000 + $60,000 + $80,000 = $200,00
As initial investment of $200,000 is recovered in three years, the payback period is three years.

A Company Is Considering Two Projects