Consider the following ten-year project.The initial after-tax outlay or after-tax cost is $1,000,000.The future after-tax cash inflows each year for years 1 through 10 are $200,000 per year.What is the payback period without discounting cash flows?
A)10 years
B)5 years
C)2.5 years
D)0.5 years

Question

Quizplus · Accepted Answer

The payback period is the time it takes for the initial investment to be recovered from the cash inflows. Here, $1,000,000 / $200,000 per year = 5 years.

Consider the Following Ten-Year Project