You are evaluating a project with an initial investment of 1

You are evaluating a project with an initial investment of $19 million dollars, and expected cash flows of $9 million dollars each for years 1-3. What is the project\'s simple payback? The corporate WACC is 11%.

Express your answer in years, rounded to 2 decimals. So, if your answer is 2.7654, then just enter 2.77.

Solution

Initial Investment = $19,000,000
Annual Cash Inflow = $9,000,000

Payback Period = Initial Investment / Annual Cash Inflow
Payback Period = $19,000,000 / $9,000,000
Payback Period = 2.11 years