Roxxon Co. wants to know how long it will take for the Alpha project to pay back its original investment. Project Alpha's expected net cash flows are as follows:

Year 0 = -600,000$

Year 1 = 325,000

Year 2 = 375,000

Year 3 = 450,000

The CFO wants to know the payback period of the Alpha project. To include the time value of money, we want to know the discounted payback period of the project.

Assuming annual cash flows are received evenly throughout the year and the project's WACC is 10%, what is this?

Regular payback period?

Discounted payback period?

Is the regular payback method or the discounted payback period method better when evaluating an alpha project?

Answer rating: 100% (QA)

To calculate the regular payback period we need to determine the time it takes for the cumulative ca... View the full answer