Payback Period

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

Colby Hepworth has just invested $$400,000$ in a book and video store. She expects to receive a cash income of $$120,000$ per year from the investment.

Carsen Nabors invested in a project that has a payback period of $4$ years. The project brings in $$960,000$ per year.

Rahn Booth invested $$1,300,000$ in a project that pays him an even amount per year for $5$ years. The payback period is $2\mathrm{.}5$ years.

Yolanda Ramirez has just invested $$2,000,000$ in a new biomedical technology. She expects to receive the following cash flows over the next $5$ years: $$600,000,$ $$800,000,$ $$1,000,000,$ $$700,000,$ and $$500,000.$ After $5$ years, she received the following actual cash flows: $$800,000,$ $$1,000,000,$ $$1,000,000,$ $$900,000,$ and $$700,000.$

Required:

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$1.$ What is the payback period for Colby? Round your answer to two decimal places.

fill in the blank $1$ of $1$

$3\mathrm{.}33$

years

$2.$ How much did Carsen invest in the project?

fill in the blank $1$ of $1$$

$3,840,000$

$3.$ How much cash does Rahn receive each year?

fill in the blank $1$ of $1$$

$560,000$

per year

$4.$ What is the expected payback period for Yolanda? The actual payback period? Round you