AMP Inc. has invested $2,165,800 on equipment. The firm uses the payback period criteria of not...
Question:
AMP Inc. has invested $2,165,800 on equipment. The firm uses the payback period criteria of not accepting any project that takes then four years to recover costs. The company anticipates cash flows of $451,386, $512,178, $564,755, $764,997, $816,500, and $825,375 over the next 6 years. What is the payback period?
Project Cashflows:
The success of a project depends upon the accurate estimation of cashflows incurred during the project period. The purchase cost can be projected accurately but it requires skill to estimate the cash inflows timings, value, and length of inflows.
Answer and Explanation: 1
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View this answerProject Details:
- The purchase cost of equipment is $2,165,800
- The project generates cash inflows for 6 years
Payback Calculations:
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How to Calculate Payback Period: Method & Formula
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Learn the meaning and purpose of the payback period method. Learn how to calculate the payback period, and understand the advantages and limitations of using this method.
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