Question

• Project cost is Rs. 30,000 and the cash inflows
are Rs. 10,000, the life of the project is 5 years.
Calculate the pay-back period.​

Answer 1

Answer:

The company started off with only two employees.

( suffered a loss , began , closed down )

Explanation:

The company started off with only two employees.

( suffered a loss , began , closed down )

Answer 2

The payback period is 3 years.

Payback period

It refers to the time period to recover the amount which was taken for starting a business or time period to recover the initial investment.

It is basically determined by adding the number of years to recover the funds or cost of investment.

• By dividing the project cost to the cash inflow.
• To calculate payback period the formula is

Payback period = Intial investment /cash flow per year

$\frac{30000}{10000}$

=3

So the payback period is 3 years.