Question

(Ignore income taxes in this problem.) The Zinger Corporation is considering an investment that has the following data: Year 1 Year 2 Year 3 Year 4 Year 5 Investment $15,000 $4,400 Cash inflow $3,400 $3,400 $8,000 $5,400 $5,400 Cash inflows occur evenly throughout the year. The payback period for this investment is: (Round your answer to 1 decimal place)

Answer 1

Answer: 3.9 years

Step-by-step explanation:

The payback period measures how long it takes for the amounts invested to be recouped from the cumulative cash inflows.

The total amount invested is $19,400.

The total cumulative cash inflow is $25,600.

Please refer to the attached image to see how the payback period was calculated.

I hope my answer helps you.