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    Adolfo's Avatar
    Adolfo Posts: 0, Reputation: 1
    New Member
    		  
    #1

    Jan 7, 2011, 10:19 PM
    Payback period
    YEAR PROJECT A PROJECT B
    0 −$100,000 −$100,000
    1 32,000 0
    2 32,000 0
    3 32,000 0
    4 32,000 0
    5 32,000 $200,000
    The required rate of return on these projects is 11 percent.
    rehmanvohra's Avatar
    rehmanvohra Posts: 739, Reputation: 27
    Senior Member
    		  
    #2

    Jan 8, 2011, 12:17 AM
    I would suggest you to please clarify whether the payback period is to be calculated in actual cash flows or discounted cash flows.

    For actual cash flows, it is easy. For discounted cash flows, you need to work out discounted cash flows for each year and then determine the payback period.

    However, you need to post your attempt to enable us to guide you. Just giving out solutions will not be helpful because it develops habit of depending on others rather than inculcate the spirit of learning.
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