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2 March, 16:30

Levi's Levees always evaluates projects using the payback method. What is the payback period for the following set of cash flows? (Round your answer to 2 decimal places, e. g., 32.16.) Year Cash Flow 0 - $ 4,900 1 1,150 2 1,350 3 2,230 4 1,250

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  1. 2 March, 18:10
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    3.14 years

    Explanation:

    Year Cash flow Accumulated cash flows

    0 - $4,900 - $4,900

    1 $1,150 - $3,750

    2 $1,350 - $2,400

    3 $2,230 - $170

    4 $1,250 $1,080

    3 years + $170/$1,250 = 3.14

    The payback period is 3.14 years, or 3 years, 1 month and 19 days.
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