Question

Suppose a software development company has undertaken a project that is expected to
cost $1,30,000/- to execute and the expected inflow is $25,000 per quarter for the first year;

$30,000 per quarter thereafter. What is the payback period for the project ?

a) 15 Months
b) 18 Months
c) 24 Months
d) 25 Months​

Answer 1

Answer:

answer is c

Explanation:

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Answer 2

Correct Answer:

a) 15 Months if the discount is 10%

Explanation:

Payback Period: 1.250 years

Discounted Payback Period: 1.394 years

Cash Flow Return Rate: 84.57% per year

 Cash Flow Net Cash Flow Discounted Cash Flow Net Discounted Cash Flow

Year 0 $-130,000.00 $-130,000.00 $-130,000.00 $-130,000.00

Year 1 $100,000.00 $-30,000.00 $90,909.09 $-39,090.91

Year 2 $120,000.00 $90,000.00 $99,173.55 $60,082.64

Year 3 $120,000.00 $210,000.00 $90,157.78 $150,240.42

Year 4 $120,000.00 $330,000.00 $81,961.61 $232,202.04

Year 5 $120,000.00 $450,000.00 $74,510.56 $306,712.59

Year 6 $120,000.00 $570,000.00 $67,736.87 $374,449.47

Year 7 $120,000.00 $690,000.00 $61,578.97 $436,028.44

Year 8 $120,000.00 $810,000.00 $55,980.89 $492,009.33

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