QS 24-1 Payback period LO P1 Park Co. is considering an investment that requires

Question

QS 24-1 Payback period LO P1

Park Co. is considering an investment that requires immediate payment of $27,000 and provides expected cash inflows of $9,000 annually for four years. What is the investment's payback period? (FV of $1, PV of $1, FVA of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.)

Park Co. is considering an investment that requires immediate payment of $27,000 and provides expected cash inflows of $9,000 annually for four years. What is the investment's payback period? (FV of $1, PV of $1, FVA of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.)

Explanation / Answer

The investment's payback period is:

= Cost of investment / Annual net cash flow

= $27,000 / $9,000

= 3.00 years

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