10-5 Payback Years 1 2 3 4 5 6 7 8 Cash Flows (52,125.00) 12,000.00 12,000.00 12

Question

10-5 Payback Years                               1 2                             3 4                       5 6                    7 8 Cash Flows           (52,125.00)              12,000.00               12,000.00            12,000.00      12,000.00      12,000.00       12,000.00    12,000.00    12,000.00 Cumulative CF Number of Years before turning Positive Portion of Next Year to Turn Positive 10-5 Payback Years                               1 2                             3 4                       5 6                    7 8 Cash Flows           (52,125.00)              12,000.00               12,000.00            12,000.00      12,000.00      12,000.00       12,000.00    12,000.00    12,000.00 Cumulative CF Number of Years before turning Positive Portion of Next Year to Turn Positive

Explanation / Answer

Year Cash Flow Cumulative cash flow 0 -52125 -52125 1 12000 -40125 2 12000 -28125 3 12000 -16125 4 12000 -4125 5 12000 7875 6 12000 19875 7 12000 31875 8 12000 43875 Payback Period=4+(4125/12000)=4.343 years

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