FUND OF ACCOUNTING PRIN W/ACC <CUSTOM>
FUND OF ACCOUNTING PRIN W/ACC <CUSTOM>
25th Edition
ISBN: 9781264725403
Author: Wild
Publisher: MCG CUSTOM
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Chapter 26, Problem 1QS
To determine

Introduction:

Payback period of any investment refers to the minimum expected time period which is required to recovery of initial investment. In other words we can say that minimum period in which initial investment will be recoverd is known as payback period.

To Calculate:

Payback period of the investment

Expert Solution & Answer
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Answer to Problem 1QS

Solution:

Payback period = (Initial investment / Annual net cash inflow) Payback period ($27000 / $9000) Payback period = 3 years

Explanation of Solution

Initial investment is given = $27000
Useful life of investment is given = 4 years
Annual cash inflows is given = $9000

Payback period of the investment will be calculated as follow;

Payback period = (Initial investment / Annual net cash inflow) Payback period ($27000 / $9000) Payback period = 3 years

Conclusion

Payback period of the investment is 3 Years.

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Chapter 26 Solutions

FUND OF ACCOUNTING PRIN W/ACC <CUSTOM>

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