Computation of payback period


Question: Three (3) separate projects each have an initial cash outlay of $10,000. The cash flow for Peters Project is $4000.00 / year for three years. The cash flow for Paul's Project is $2000.00 in years I & 3, and $8000.00 in year 2. Mary's Project has a cash flow of $10,000.00 in year 1, followed by $1000.00 each year for years 2 & 3.

[A] Apply the payback method to compute how many years it will take for each project to recoup the initial investment.

[B] Which project would you consider most liquid?

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Cost Accounting: Computation of payback period
Reference No:- TGS022320

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