What is the payback period of the following project?

Initial Investment: $50,000
Projected life: 8 years
Net cash flows each year: $10,000

The payback period is the length of time required to recover the initial investment in a project. In this case, the initial investment is $50,000 and the net cash flows each year are $10,000. To calculate the payback period, you need to determine how many years it will take for the cumulative net cash flows to equal or exceed the initial investment.

To find the payback period, you can follow these steps:

1. Calculate the cumulative net cash flows for each year:
- Year 1: $10,000
- Year 2: $10,000 + $10,000 = $20,000
- Year 3: $20,000 + $10,000 = $30,000
- Year 4: $30,000 + $10,000 = $40,000
- Year 5: $40,000 + $10,000 = $50,000 (equal to the initial investment)

2. The cumulative net cash flows equal the initial investment in Year 5, so the payback period is 5 years.

Therefore, the payback period for this project is 5 years.