Problem:
Warnock Inc. is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that a project's projected NPV can be negative, in which case it will be rejected.
WACC: 10.00%
Year 0 1 2 3
Cash flows -$950 $500 $400 $300
The NPV is 60.52, but what I would like to know is:
Required:
Question: What is the project's payback? Calculate payback period (x.xx years).
Note: Please show how to work it out.