How to calculate payback period?

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Jarrod RobelLv2

31 Mar 2020

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Related questions

Consider the following projects:
CASH FLOWS ($)
PROJECT C_0 C_1 C_2 C_3 C_4 C_5
A -1000 +1000 0 0 0 0
B -2000 +1000 +1000 +4000+1000 +1000
C -3000 +1000 +1000 0 +1000 +1000

If the opportunity cost of capital is %10, which projects have apositive NPV?

Calculate the payback period for each project.

Which project(s) would a firm using the payback rule accept if thecutoff period were three years?

Calculate the discounted payback period for each period.

Which project(s) would a firm using the discounted payback ruleaccept if the cutoff period were three years?

raspberrysquirrel337

Roxxon Co. wants to know how long it will take project Alpha to pay back its orginal investment. Project Alpha's expected net cash flows are shown as follows:

Year 0 = -$600,000

Year 1 = 325,000

Year 2 = 375,000

Year 3 = 450,000

The CFO wants to know project Alpha's payback period. In order to include the time value of money, we want to know the project's discounted payback period.

Assuming that annual cash flows are received evenly throughout the year and the project's WACC is 10% what is the:

Regular payback period?

Discounted payback period?

Is the regular payback method or the discounted payback period ethod better when evaluating project Alpha?

jadecrab559

An investment project provides cash inflows of $1,175 per year for eight years. (Do not round intermediate calculations. Enter 0 if the project never pays back. Round your answers to 2 decimal places (e.g., 32.16).)

Requirement 1:

What is the project payback period if the initial cost is $3,900?

Payback period

years

Requirement 2:

What is the project payback period if the initial cost is $4,950?

Payback period

years

Requirement 3:

What is the project payback period if the initial cost is $10,400?

Payback period

years