"vulcan materials company is considering an investment that will have an initial cost of $8,500 but is expected to produce net cash flows of $1,400, $2,300, $3,100, and $2,000 over the next four years, respectively. determine vulcan's payback period."

3.85 years

Explanation:

The payback period is the time that a company takes to recover its initial investment. Considering an initial investment of $8,500, and that cash flows are evenly distributed within each year, the payback period can be found by:

The payback period occurs sometime between years 3 and 4. The fraction of year 4 needed to reach payback is:

The company needs 3 years and 0.85 of the fourth year to break even. Therefore, the payback period for Vulcan Materials Company is 3.85 years.

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