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How long is the payback period for Proposal X

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Question - Redwood Corporation is considering two alternative investment proposals with the following data:

 

Proposal X

Proposal Y

Investment

$830,000

$510,000

Useful life

8 years

8 years

Estimated annual net cash inflows for 8 years

$135,000

$83,000

Residual value

$50,000

$-

Depreciation method

Straight-line

Straight-line

Required rate of return

16%

9%

How long is the payback period for Proposal X?

A) 10.00 years

B) 6.14 years

C) 6.15 years

D) 12.00 years

Reference no: EM132504622

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