The payback period of the project is: project x
Use the equation IRR= [(FV/PV)]1/n – 1 where FV is the future value at the end of year 10 ($5431), PV is the initial investment amount ($2593), and n is 10 years. Inputting these figures into our equation gives us an IRR (internal rate of return) of 0.14 or 14%.
If this project is undertaken, it will yield a rate of return on investment (ROI) of 14 % over the next ten-year period. In other words, every $100 initially invested in this project could be expected to earn $114 back after 10 years. Since this is a higher rate than the return on investment that can be expected from risk-free investments, such as CDs or bonds, it might be worth taking this project on if there aren’t any significant risks.