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Question

If a project needs an initial investment of 25,000, calculate the payback period from the below given information

A 4 years Correct Answer Incorrect Answer
B 3.5 years Correct Answer Incorrect Answer
C 4.5 years Correct Answer Incorrect Answer
D 3.3 years Correct Answer Incorrect Answer
E 3.8 years Correct Answer Incorrect Answer

Solution

It is evident form the above table that in 3 years 22,000 has been recovered and 3,000 is left of initial investment of 25,000. It indicates that payback period is between 3 to 4 years calculated as follows: Payback period = 3 years + 3000/6000 = 3.5 years.

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