2. ABC Company is currently contemplating an IT project that could be developed with an initial investment of $50,000. The estimated cash flows over 3 years of operation would be: Year Estimated Cash Flows 0 ($50,000) 1 $30,000 2 $50,000 3 $60,000 A. What would be the payback period for this investment? Please show your calculations (4 points)

1.40 years

Explanation:

In the payback, we analyze in how many years the invested amount is recovered. The computation is shown below:

In year 0 = $50,000

In year 1 = $30,000

In year 2 = $50,000

In year 3 = $60,000

If we considered only year 1 cash inflows than it would be $30,000

Now we subtract the $30,000 from the $50,000, so the remaining amount would be $20,000 as if we added the second year cash inflow so the total amount exceed to the initial investment. Therefore, we deduct it

And, the next year cash inflow is $50,000

So, the payback period equal to

= 1 years + $20,000 ÷ $50,000

= 1.40 years

i think the answer would be b hope this

correct, but each time you dont pay the price of the penalty can increase.