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Assume the following information for a capital budgeting proposal with a five- year time horizon: Initial investment: Cost of equipment (zero salvage value) $
Assume the following information for a capital budgeting proposal with a five- year time horizon: Initial investment: Cost of equipment (zero salvage value) $ 500,000 Annual revenues and costs: Sales revenues Variable expenses Depreciation expense $ 300,000 $ 130,000 $50,000 Fixed out-of-pocket costs $40,000 The payback period for this investment is closest to: 3.85 years. 2.94 years. 1.52 years. 6.25 years.
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