Guerilla Radio Broadcasting has a project available with the

Guerilla Radio Broadcasting has a project available with the following cash flows :

What is the payback period?

3.00 years

2.98 years

3.13 years

1.32 years

2.68 years

Solution

Payback period=Last period with a negative cumulative cash flow+(Absolute value of cumulative cash flows at that period/Cash flow after that period).

2+(1700/2500)

=2.68 year.