1.Calculation of payback period for the project

Initial cost of system=$34000+$15000+$3000

=$52,000

System also require annual cost of $2000.It will considered as outflow and system has annual inflow of $9000 which will increase 10% annually and $2000 in form of intangible benefit.

Statement showing cummulative cash flow:

Year	Cash inflow(a)	Cash outflow(b)	Net Cash flow(a-b)	Cummulative cash flow
0	0	-$52,000	-$52,000	-$52,000
1	$9000+$2000=$11000	-$2000	$9000	-$43000
2	$9000(1.10)+$2000	-$2000	$9900	-$33,100
3	$9900(1.10)+$2000	-$2000	$10,890	-$22,210
4	$10890(1.10)+$2000	-$2000	$11,979	-$10231
5	$11,979(1.10)+$2000	-$2000	$13,176.90	$2945.90
6
7

Payback Period=A+(B/C)

A=Last year with negative cummulative cash flow

B=Cummulative cash flow without negative sign at the end of period A

C=Net Cash flow during the period following year A

Payback Period=4+($10,231/$13,176.90)

=4+0.78

=4.78 years

1.Calculation of payback period for the project

Initial cost of system=$34000+$15000+$3000

=$52,000

System also require annual cost of $2000.It will considered as outflow and system has annual inflow of $9000 which will increase 10% annually and $2000 in form of intangible benefit.

Statement showing cummulative cash flow:

Year	Cash inflow(a)	Cash outflow(b)	Net Cash flow(a-b)	Cummulative cash flow
0	0	-$52,000	-$52,000	-$52,000
1	$9000+$2000=$11000	-$2000	$9000	-$43000
2	$9000(1.10)+$2000	-$2000	$9900	-$33,100
3	$9900(1.10)+$2000	-$2000	$10,890	-$22,210
4	$10890(1.10)+$2000	-$2000	$11,979	-$10231
5	$11,979(1.10)+$2000	-$2000	$13,176.90	$2945.90
6
7

Payback Period=A+(B/C)

A=Last year with negative cummulative cash flow

B=Cummulative cash flow without negative sign at the end of period A

C=Net Cash flow during the period following year A

Payback Period=4+($10,231/$13,176.90)

=4+0.78

=4.78 years

Question:

what is the ROI here