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in Entrepreneurship by (52.5k points)

If the cost of a project is Rs 1500000 and the firm a receives annual cash in flow of Rs 600000 find out the pay back period.

1 Answer

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Best answer

P = I/R

Where, P = Pay- back period, 

I = Investment or cost of project,

R = Return from investment

Given,

Cost of Project (I) Rs 1500000

Return from investment =(R) 600000

P = 1500000/600000 = 2.5 years

So, Pay-back period is 2yrs and 6 moths

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