A project has $200 of unrecovered cost at the start of the recovery year, the full cash flow in that year is $400, and three years pass before full recovery. What is the payback period?
Correct answer B. 3.5 years
Explanation
Payback equals the years before full recovery plus the unrecovered cost divided by the cash flow in the recovery year: 3 + 200/400 = 3.5 years.
Answer checked How we write and check questions
Discussion