Compute the payback period for a project with the following cash flows, if the companys discount rate

Question:

Compute the payback period for a project with the following cash flows, if the company’s discount rate is 12%.

Initial outlay = $450

Cash flows:

Year 1 = $325

Year 1 = $ 65

Year 3 = $100

A. 2.88 years

B. 3.43 years

C. 2.6 years

D. 3.17 years

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal... Payback Period
Payback period method is a traditional method/ approach of capital budgeting. It is the simple and widely used quantitative method of Investment evaluation. Payback period is typically used to evaluate projects or investments before undergoing them,...