Payback Period

Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows.

1. Colby Hepworth has just invested $450,000 in a book and video store. She expects to receive a cash income of $120,000 per year from the investment.
2. Kylie Sorensen has just invested $1,520,000 in a new biomedical technology. She expects to receive the following cash flows over the next 5 years: $350,000, $490,000, $760,000, $440,000, and $320,000.
3. Carsen Nabors invested in a project that has a payback period of 4 years. The project brings in $960,000 per year.
4. Rahn Booth invested $1,300,000 in a project that pays him an even amount per year for 5 years. The payback period is 2.5 years.

2. What is the payback period for Kylie? Round your answer to one decimal place.