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13 October, 07:14

Calculate the payback period for the following investment: Invest ($10,000). Cash flows in Yr1: 1,000; Yr2: 3,000; Yr3: 3,000; Yr4: 3,000; Yr5: 100,000; Yr6: 250,000. Group of answer choices 6 years 4 years 5 years 3 years

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  1. 13 October, 10:22
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    4 years

    Explanation:

    The computation of the payback period is shown below:

    In the payback, we analyze in how many years the invested amount is recovered

    In year 0 = - $10,000

    In year 1 = $1,000

    In year 2 = $3,000

    In year 3 = $3,000

    In year 4 = $3,000

    In year 5 = $100,000

    In year 6 = $250,000

    If we sum the first 4 year cash inflows than it would be $10,000

    And, the initial investment is also $10,000

    So, in 4 years, the investment amount is recovered
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