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Calculate the payback period for investment a

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Dragonfly, Inc. is evaluating two possible investments in depreciable plant assets. The company uses the straight-line method of depreciation. The following information is available:

                                                     Investment A                        Investment B

Initial capital investment              $105,000                              $150,000

Estimated useful life                       10 years                            10 years

Estimated residual value                        0                               $27,000

Estimated annual net cash inflow

for 10 years                                        $24,000                        $50,000

Required rate of return                              12%                           14%

Question 1: Calculate the payback period for Investment A. (Round your answer to two decimal places.)

Reference no: EM132579528

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