Answer :
Answer:
3.5 years
Explanation:
The computation of the payback period is shown below:
In year 0 = -$44,000
In year 1 = $10,000
In year 2 = $10,000
In year 3 = $15,000
In year 4 = $18,000
In year 5 = $15,000
If we add the first 3 year cash inflows than it would cost $35,000
Now we deduct the $35,000 from the $44,000 so the amount left would be $9,000 as if we added the fourth year cash inflow so the total amount exceed to the initial investment. So, we deduct it
And, the next year cash inflow is $18,000
So, the payback period equal to
= 3 years + $9,000 ÷ $18,000
= 3 years + 0.5
= 3.5 years
Since the question has ask about only payback period so we ignored the discount rate i.e given in the question
The payback period for this project is 4.2 years.
The payback period of an investment is the period it takes to recover the amount invested in a project from its cumulative cash flows.
The cost of the project is 44,000
- Cumulative cash flow in year 1 = 10,000
- Cumulative cash flow in year 2 = 20,000
- Cumulative cash flow in year 3 = 35,000
- Cumulative cash flow in year 4= 53,000
- Cumulative cash flow in year 5 = 68,000
The amount invested in the project would be recovered in year 4.
4 + [tex]\frac{53,000 - 44,000}{44,000}[/tex] = 4.2 years
To learn more, please check: https://brainly.com/question/13978071