Equipment 10 year useful life with no salvage value at end of 10 years. Company expects net annual cash inflows of 54,000. Internal rate of return is 14%. Discount rate is 14%. What is the payback period of equipment?
A 1.92 years
At IRR the NPV is zero.
NPV = PV of inflows - initial investment
Using this we find out the initial investment
The inflows are 54,000 ...
The solution explains how to calculate the payback period.