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A firm is considering a project that requires an initial investment of $420,000. The life of this project is five years. Cash flows for each
A firm is considering a project that requires an initial investment of $420,000. The life of this project is five years. Cash flows for each year are estimated as follows: Year 1 Year 2 Year 3 Year 4 Year 5 $180,000 $220,000 $160,000 -$20,000 -$80,000 If the cost of capital of this project is 8%, what is the payback period of this project? 2.50 years 2.00 years 2.13 years 3.00 years 3.13 years True or false: When you have to rank multiple projects, the internal rate of return method is the way to go. True False
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