$6.$ The NPV and payback period

What information does the payback period provide?

Suppose Extensive Enterprises$$s CFO is evaluating a project with the following cash inflows. She does not know the project$$s initial cost; however, she does know that the project$$s regular payback period is $2\mathrm{.}5$ years.

Year

Cash Flow

Year $1$ $$275,000$

Year $2$ $$475,000$

Year $3$ $$400,000$

Year $4$ $$475,000$

If the project$$s weighted average cost of capital $($WACC$)$ is $10\%,$ what is its NPV$?$