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Q:

The payback period can become an important issue when a large scope project is developed over several years. Maureen has been assigned the responsibility of calculating the payback period for her project that is to be completede in 3 years. The internal rate of return(IRR) is 7% and the annual savings will be $800,000 per year. The total cost is $4,000,000 and the rate of return during this time period is 3%. What is the payback period of Maureen's project?

A) 3 years B) 4 years
C) 5 years D) 13.3 years
 
Answer & Explanation Answer: C) 5 years

Explanation:

The payback period is how long it takes to recoup your investment. In this example, the cost was $4,000,000 and the savings was $800,000 per year. $4,000,000/$800,000 = 5. Therefore, Answer A, B and D are incorrect.

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Q:

what is the internal rate of return(IRR) of eurekaforbes?

Answer

Internal Rate of Return is that rate of Return at which the net present value is equal to Zero or it is the Rate which equates the present value of the cash inflows to the cash outflows.


NPV = Cash Inflow - Cash outflow


NPV = Zero


 

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Subject: Finance