Assuming that cash flows are received evenly throughout the year,what is the payback period for a project with an initial outlay of $15 000 and cash flows of $4000 p.a.for the next five years?
A)5 years.
B)3 years.
C)3.75 years.
D)4 years.

Question

Quizplus · Accepted Answer

The payback period is the time it takes for a project to recoup its initial investment. In this case, the initial investment is $15,000 and the cash inflows are $4,000 per year.

To calculate the payback period, we divide the initial investment by the annual cash inflows:

Payback period = Initial investment / Annual cash inflows

Payback period = $15,000 / $4,000 per year

Payback period = 3.75 years

Therefore, the best choice would be C, with a payback period of 3.75 years.

Assuming That Cash Flows Are Received Evenly Throughout the Year,what