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Homework answers / question archive / Green Cars Inc is considering a project with the following expected cash flows
Green Cars Inc is considering a project with the following expected cash flows. Year 0 1 2 3 Cash Flow -S75,000 $18,500 $18,500 $18,500 $18.500 $12.500 $12,500 $12.500 S12,500 4 5 6 7 8 What is the payback period of this project? 1.28 years 2.28 years 4.08 years 3.28 years
Ans 4.08 years
| Year | Cash Flow | Cumulative Cash Flow |
| 0 | -75000 | -75000 |
| 1 | 18500 | -56500 |
| 2 | 18500 | -38000 |
| 3 | 18500 | -19500 |
| 4 | 18500 | -1000 |
| 5 | 12500 | 11500 |
| 6 | 12500 | 24000 |
| 7 | 12500 | 36500 |
| 8 | 12500 | 49000 |
| TOTAL | 49000 | |
| Payback Period = | 4 years + 1000/12500 | |
| 4.08 YEARS |
