A project has the following cash flows: $\begin{array}{llllll}
\text { Year } & 0 & 1 &2& 3 & 4 \
\text { Cash flow } & (\$ 240,000) & \$ 60,000 & \$ 100,000 & \$ 60,000 & \$ 80,000
\end{array}$ The project's payback period is:

Question

Quizplus · Accepted Answer

The payback period is the time it takes for the cumulative cash flows to equal the initial investment. By the end of year 3, the cumulative cash flow is $220,000. In year 4, an additional $80,000 is received. To recover the remaining $20,000, it takes $20,000/$80,000 = 0.25 years. Thus, the payback period is 3.25 years.

A Project Has the Following Cash Flows The Project's Payback Period Is: A) Four Years

A Project Has the Following Cash Flows The Project's Payback Period Is:
A) Four Years