LJM payback period

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December 4, 2014 at 4:24 pm #217452
jurga
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Please advise how do I calculate payback period?

New project cost $160,000. 4 years expected life and scrap value $20,000.
Net cash flows are as follows:
Yr1 $40,000
Yr2 $60,000
Yr 3 $80,000
Yr4 $20,000

Many thanks
December 4, 2014 at 5:08 pm #217522
John Moffat
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After 2 years they have had back 100,000, so need an extra 60,000.
This will take 60,000/80,000 of the third year (or 0.75)

SO payback = 2.75 years
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