Payback Period – What are the Payback Periods of Projects E, F, G and H
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Payback Period – What are the Payback Periods of Projects E, F, G and H? Assume all cash flows are evenly spread throughout the year. If the cut-off period is three years, which projects do you accept?
Projects | E | F | G | H |
Cost | $40,000 | $250,000 | $75,000 | $100,000 |
Cash Flow Year One | $10,000 | $40,000 | $20,000 | $30,000 |
Cash Flow Year Two | $10,000 | $120,000 | $35,000 | $30,000 |
Cash Flow Year Three | $10,000 | $200,000 | $40,000 | $30,000 |
Cash Flow Year Four | $10,000 | $200,000 | $40,000 | $20,000 |
Cash Flow year Five | $10,000 | $200,000 | $35,000 | $10,000 |
Cash Flow Year Six | $10,000 | $200,000 | $20,000 | $0 |