Question

if the cost of a project is Rs 1500000 and the firm receives annual cash inflow of Rs 600000 find out the payback period​

Answer 1

Answer:

The payback period is 2.5 years.

Explanation:

$P=\frac{I}{R}$

Where P = Pay-back period  

I = Investment

or cost of project R = Return from investment

Given Cost of the Project is Rs 1500000

Return from investment = 600000

$P=\frac{1500000}{600000}$

= 2.5 years

So the Pay-back period is 2yrs and 6 months

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Answer 2

Answer:

The payback period is two and a half years, it is  2.5 years

Explanation:

From the above question,

They have given :

The cost of a project is Rs 1500000 and the firm receives annual cash inflow of Rs 600000 find out the payback period​.

To calculate the total cost of the project:  

    The cost of the project =  Rs 1500000

To calculate the annual cash inflow of the project:

     The annual cash inflow of the project = Rs 600000

The payback period is a measure of the time required to recover the cost of an investment. It is calculated by dividing the initial cost of the investment by the annual cash inflow generated by the investment. The payback period is generally expressed in years.

If the payback period is less than the expected life of the investment, the investment is usually deemed to be financially viable.

By divide the total cost of the project by the annual cash inflow:    

        1500000/600000 = 2.5

The payback period is two and a half years.

The payback period is two and a half years, it is  2.5 years

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