Question

2. Consider a project which requires $1000 of initial investment and generates the next cash flows $300, $300 and $500 over the next three years. When the project is profitable?

Answer 1

The project is profitable after 3.8 years

Step-by-step explanation:

Year Cash Flow Cumulative

0 -$1000 -$1000

1 $300 -$700

2 $300 -$400

3 $500 $100

400/500 0.8

3.8 years