Chapter 5, Problem 2QAP

Summary Introduction

Payback period:

The payback period determines the period within which the investment is able to recover the cost or amount invested. This is referred to as a period at which the investor is at par with all the cash recovered that has been invested.

Requirement 1

To determine:

The project’s payback period if the initial cost is $2,700.

Requirement 2

To determine:

The project’s payback period if the initial cost is $3,900.

Requirement 3

To determine:

The project’s payback period if the initial cost is $6,800.