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Homework answers / question archive / An initial investment of $3,500,000 in a business opportunity can generate a net income of $900,000 per year
An initial investment of $3,500,000 in a business opportunity can generate a net income of $900,000 per year. If i = 0%, the payback period is closest to 2.57 years.
Select one:
True
False
Computation of Payback Period:
Payback Period = Initial Investment / Annual Cash Flow
= $3,500,000/$900,000
Payback Period = 3.89 years
As we can see, Payback period is 3.89 years. So, above statement is false.
