A project requires an initial investment of $100,000 and is expected to return net cash inflows of $25,000 per year. What is the simple payback period?

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Accepted Answer

4 years. Payback period = initial investment / annual net cash inflow = 100,000 / 25,000 = 4 years. This is the time needed for cumulative inflows to recover the initial outlay.

A project requires an initial investment of $100,000 and is expected to return net cash inflows of $25,000 per year. What is the simple payback period?

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