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Company ABC is evaluating a project with an initial investment of $1 million. The project is expected to generate cash flows of $300,000 per year

Company ABC is evaluating a project with an initial investment of $1 million. The project is expected to generate cash flows of $300,000 per year for 5 years. Calculate the payback period of the project and discuss its interpretation in investment decision-making. Explain the payback period as a capital budgeting technique used to assess the time it takes for an investment to recover its initial cost. Discuss the advantages and limitations of the payback period method in investment evaluation, its sensitivity to cash flow timing, and its suitability for analyzing project risk and liquidity.

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