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    sumluck1111's Avatar
    sumluck1111 Posts: 3, Reputation: 1
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    #1

    Feb 11, 2008, 07:22 PM
    Payback period
    An investment project provides cash flows of $860 per year for six years. What is the payback period if the initial cost is $3500? What is the payback period if the initial cost is $5000? What if it is $7500?

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    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #2

    Feb 12, 2008, 02:02 PM
    There's more than one way to do this. The simple payback method is just the total investment costs divided by the provided cash flows per year. Although that isn't going to make much sense once you get to $7500.
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