Compute what is the payback period for the investment

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Problem 1: The Seattle Corporation has been presented with an investment opportunity which will yield cash flows of $30,000 per year in Years 1 through 4, $35,000 per year in Years 5 through 9, and $40,000 in Year 10. This investment will cost the firm $150,000 today, and the firm's cost of capital is 10%. Assume cash flows occur evenly during the year, 1/365th each day. What is the payback period for this investment?

Option 1. 4.35 years

Option 2. 3.35 years

Option 3. 3.72 years

Option 4. 4.86 years

Option 5. 5.23 years

Reference no: EM132643618

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