A capital investment requiring one initial cash outflow is forecast to have the operating profits listed below.

Question:

A capital investment requiring one initial cash outflow is forecast to have the operating profits listed below. The investment has an NPV of $20,850, based on a required rate of return of 12%. Calculate the of the investment.
Year Operating profit ($)
1 ……………………….74,000
2 ……………………….84,000
3 ……………………….96,000
4 ……………………….70,000 Payback Period
Payback period method is a traditional method/ approach of capital budgeting. It is the simple and widely used quantitative method of Investment evaluation. Payback period is typically used to evaluate projects or investments before undergoing them,...