Ask Question
29 October, 20:00

You invest $50,000 now and receive $10,000 per year for 15 years starting at the end of the first year. What is the payback period in whole number years for this investment? In other words, in what year do you break even on this investment? Use i = 9% annual rate compounded annually, and use the discounted payback approach (not Simple Payback)

+2
Answers (1)
  1. 29 October, 23:25
    0
    Number of years = 7.064 years

    Explanation:

    Giving the following information:

    You invest $50,000 now and receive $10,000 per year for 15 years starting at the end of the first year. I = 9%

    Io = 50,000

    I1 = 10,000/1.09 = 9,174.31

    Collected payback = 9174.31

    I2 = 10000/1.09^2 = 8416.80

    Collected payback = 17,591.11

    I3 = 10000/1.09^3 = 7721.83

    Collected payback = 25,312.94

    I4 = 10000/1.09^4 = 7,084.25

    Collected payback = 32,397.19

    I5 = 10000/1.09^5 = 6,499.31

    Collected payback = 38,896.5

    I6 = 10000/1.09^6 = 5,962.70

    Collected payback = 44,859.2

    I7 = 10000/1.09^7 = 5470.34

    Collected payback = 50,329.54

    Number of years = 7 years + [329.54 / (50000-44859.2) ] = 7.064 years
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “You invest $50,000 now and receive $10,000 per year for 15 years starting at the end of the first year. What is the payback period in whole ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers