Payback Period (Even cash flows)

Suppose that a particular investment required an up-front capital outlay of $100,000. This investment is expected to yield cash flows of $40,000 per year for 10 years. What is the payback period for this investment? If required, round your answer to two decimal places.

Payback Period (Even cash flows) Suppose that a particular investment required an up-front capital outlay of $100,000. This investment is expected to yield cash flows of $40,000 per year for 10 years. What is the payback period for this investment? If required, round your answer to two decimal places. Formula: Payback Period In Investment/Annual Cash Flow Payback Period years Accounting Rate of Return The accounting rate of return is another non-discounting financial model commonly used in making capital investment decisions. Unlike the payback period model, the accounting rate of return uses income rather than cash flow. Assume that the investment is the same as before: Initial outlay of $100,000 with a five-year useful life and no salvage value under straight-line depreciation. The revenues are as follows Year 1: $10,000, Year 2: $20,000, Year 3: $30,000, Year 4: $40,000 and Year 5: $50,000 Use the minus sign to indicate a net loss. If an amount is zero, enter "0". If required, enter the accounting rate of return as a decimal (i.e. 0.3). Year Revenues Expenses Net Income Year 1 Net Income (loss) $10,000 $20,000 Year 2 Net Income (loss) Year 3 Net Income (loss) Year 4 Net Income (loss) Year 5 Net Income (loss) Total Net Income (five years) Average Net Income Accounting Rate of Return