A capital budgeting project has a net investment of $550,000 and is expected to generate net cash flows of $200,000 annually for 7 years. What is the payback period?
A)5.5 years
B)2.25 years
C)2.55 years
D)2.75 years

Question

Quizplus · Accepted Answer

The payback period is calculated by dividing the net investment by the annual cash inflow. $550,000 / $200,000 = 2.75 years.

A Capital Budgeting Project Has a Net Investment of $550,000