A project has estimated annual net cash flows of $60,000. It is estimated to cost $240,000. Determine the cash payback period.

Cash Payback Period

The time it takes for an investment to generate enough cash flow to recoup the initial outlay.

Net Cash Flows

The difference between the cash inflows and outflows in a company during a specific period, reflecting the company’s overall liquidity position.

Estimated Cost

An approximation of the cost to complete a project, task, or transaction, made in the absence of full information.

Calculate and interpret the criticality of the cash payback period within investment decision processes.

Verified Answer

Final Answer :

4 years
($240,000/$60,000)

Learning Objectives

Calculate and interpret the criticality of the cash payback period within investment decision processes.