Suppose a firm has an initial expenditure of $5,000. The cash inflows are $1,150 at the end of year 1, $1,350 at the end of year 2, $700 at the end of year 3, $1,600 at the end of year 4 and $3,350 at the end of year 5.

Find the payback period. If the investor has set a pay back period of 3 years, should she accept the project?

Answer rating: 100% (QA)

To find the payback period we need to determine the point in time at which the cumulative cash inflo... View the full answer