Managerial Accounting

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Abby Co. Compute Payback in Months


Abby Co. is considerating a project that requires an initial investment of \$600,000 and has the following cash inflows and cash outflows over the project's life (assume evenly throughout each year). Ignore income taxes. What is the payback period in months (not years) rounded to the nearest month?

Cash Inflows Cash Outflows --- ---
Year 1 \$200,000 \$120,000
Year 2 \$450,000 \$150,000
Year 3 \$450,000 \$160,000
Year 4 \$340,000 \$150,000