Find the payback period for the following project:
Initial Outlay $8,710
Year 1 $3,330
Year 2 $3,010
Year 3 $3,900
Year 4 $7,990
The answer should be calculated to two decimal places.
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Initial outlay = $8,710
Payback period is the period taken to recover the initial outlay.
Hence payback period = 2 + (2370/3900 ) years
= 2.61 years
In 2 years, the project reaps $6340. Balance remaining to recover initial capital = 2370.
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