Aaron Plant FIN510 Summer I12018 apia Home Grades Personaliz

Aaron Plant FIN510 Summer I1,2018 apia Home Grades Personalized Reviews Discussion Course Materials Final Exam-Chapters 7-11, 14, 16 | Back to Assignment ttempts Score: 13 21. Problems 11.04 11-8: Payback Period Payback period Project K costs $65 OO, its expected cash inflows are $10,000 per year for 8 years, and its WACC is 11%. What is the project\'s pay back? Round your answer to two decimal places Continue without saving Copyright Notices Terms of Use Privacy NoticeSecurity Notice Accessiblity

Solution

PAYBACK PERIOD = INITIAL INVESTMENT/ AVERAGE ANNUAL CFAT

THIS IS THE FORMULA USED WHEN CASHFLOWS ARE SAME EVERY YEAR

SO PAYBACK PERIOD = 65000/10000 =6.50 YEARS

ANSWER : 6.50 YEARS