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    What is the project's payback period?

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    Jane needs a new floor. It will take $100,000

    She thinks that he can improve revenue through fewer misdirected sales inquiry calls, resulting in higher sales. Through analysis, she has determined that improvement to cash flow for the company will be $40,000 in years one through five. Thus, the time horizon is five years and you will get the benefit at the end of the year.

    Your company can get 10% on invested funds (the market rate of return).

    Calculate the NPV
    What is the project's payback period?

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    Solution Preview

    First write the cash flow
    Year Cash Flow
    0 -100000
    1 40000
    2 40000
    3 40000
    4 40000
    5 40000

    For ...

    Solution Summary

    The solution determines a projects payback period.