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Services united is considering a new project that requires an initial cash investment of $26,000. the project will generate cash inflows of $2,500, $11,700, $13,500, and $10,000 over each of the next four years, respectively. how long will it take to recover the initial investment?

Respuesta :

W0lf93
To find the payback rate, the equation is (# of years to get past break-even) + [(initial investment - each year's return) / (final year's return to pass the break-even point)]. In this case, this would be (3 + [(26000 - 2500 - 11700 - 13500) / (13500)]. This would be (3 + (-0.126)), or approximately 2.874 years to recover the initial $26,000 investment.

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