Unformatted text preview: 16,125 4 12,000 4,125 5 12,000 7,875 6 12,000 19,875 7 12,000 31,875 8 12,000 43,875 The cumulative cash flows turns positive in Year 5, so the payback will be 4 plus the part of Year 5 that is required to return the investment: Payback = 4 + ($4,125/$12,000) = 4.34. Because the future cash flows are identical, we can also find the payback period by dividing the cost by the cash flow: $52,125/$12,000 = 4.34....
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 Spring '08
 Staff
 Net Present Value, $12,000, 5 Year, $52,125, $4,125, $59,611.68

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