Pendleton Products has a project requiring an initial cash investment of $3,100. The project is expected to return $1,000 each period for the next 5 periods, and it has a discount rate of 4%. 1. Determine how long it will take, if at all, for the project to have a positive payback. Present value formula:

Essentials Of Investments
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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Pendleton Products has a project requiring an initial cash investment of $3,100. The project is expected to return $1,000 each period for the next 5 periods, and it has a discount rate of 4%.

1. Determine how long it will take, if at all, for the project to have a positive payback.

Present value formula:

 

Cash received
(1+r)²
(Round your answers to two decimal places when needed and use rounded answers for all future
calculations).
Present value =
Initial Investment
Period 1
Period 2
Period 3
Period 4
Period 5
where r = rate and p = # of periods.
PV of Amount Received
Balance
2. During which period will there be a positive payback? [Select an answer
Transcribed Image Text:Cash received (1+r)² (Round your answers to two decimal places when needed and use rounded answers for all future calculations). Present value = Initial Investment Period 1 Period 2 Period 3 Period 4 Period 5 where r = rate and p = # of periods. PV of Amount Received Balance 2. During which period will there be a positive payback? [Select an answer
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