Chapter 26, Problem E26.19E

To determine

Concept Introduction:

Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. If a project has equal net cash flows each year, the payback period can be calculated by dividing the initial investment by the annual net cash flows from the project. The formula to calculate the Payback period is as follows:

$PaybackPeriod=\frac{InitialInvestment}{AnnualCash\inf low}$

However, if a project has uneven cash flows, the payback period is calculated by finding the accumulated cash flows.

To calculate: The payback period for the project