Question

An investment proposal with an initial investment of $100,000 generates annual net cash inflow of $20,000 for a period of 10 years. The project has a net present value of $10,000. What is this investment proposal's payback period?

Answer 1

5 years

Step-by-step explanation:

Initital investment $100,000

Cash inflows 1-5 (20,000*5) ($100,000)

The payback period for this investment project is 5 years.

or

100,000/20,000=5 years