Guerilla Radio Broadcasting has a project available with the following cash flows :   Year Cash Flow 0 −$14,600   1 6,000   2 7,300   3 5,300   4 5,100       What is the payback period?

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Guerilla Radio Broadcasting has a project available with the following cash flows :
 

Year Cash Flow
0 −$14,600  
1 6,000  
2 7,300  
3 5,300  
4 5,100  
 

 
What is the payback period?

Expert Solution
Step 1

Payback period, a type of capital budgeting, gauges how long it will take to recoup an investment's cost.

In case of uneven Cash Flows, Formula:

Payback Period = Years before Positive cumulative cash flows + -ve cumulative cash flows at beginning of the year / Cash flow during the year

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