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Determine the payback period for the investment

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Reference no: EM132791551

Question - Chee Corporation has gathered the following data on a proposed investment project:

Investment required in equipment $240,000

Annual cash inflows $50,000

Salvage value 0

Life of the investment $50,000

Required rate of return 10%

The company uses straight-line depreciation. Assume cash flows occur uniformly throughout a year except for the initial investment. Determine the payback period for the investment?

a) 0.2 years

b) 2.5 years

c) 4.8 years

d) 5.0 years

Reference no: EM132791551

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