Hello, I need help answering this question below. 4 value: 0.50 points Problem 7

Question

Hello,

I need help answering this question below.

4 value: 0.50 points Problem 7-2 Calculating Payback An investment project provides cash inflows of $645 per year for eight years What is the project payback period if the initial cost is $1,550? (Do not round intermediate calculations. Enter 0 if the project never pays back. Round your answer to 2 decimal places (e.g., 32.16).) Payback period years What is the project payback period if the initial cost is $3,300? (Do not round intermediate calculations Enter 0 if the project never pays back. Round your answer to 2 decimal places (e.g., 32.16).) Payback period years What is the project payback period if the initial cost is $5,400? (Do not round intermediate calculations Enter 0 if the project never pays back. Round your answer to 2 decimal places (e.g., 32.16).) Payback period years

Explanation / Answer

Answer a.

Annual Cash Inflows = $645
Initial Cost = $1,550

Payback Period = Initial Cost / Annual Cash Inflows
Payback Period = $1,550 / $645
Payback Period = 2.40 years

Answer b.

Annual Cash Inflows = $645
Initial Cost = $3,300

Payback Period = Initial Cost / Annual Cash Inflows
Payback Period = $3,300 / $645
Payback Period = 5.12 years

Answer c.

Annual Cash Inflows = $645
Initial Cost = $5,400

Payback Period = Initial Cost / Annual Cash Inflows
Payback Period = $5,400 / $645
Payback Period = 8.37 years

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