DON'T FORGET TO TAKE THE 10% INTO CONSIDERATION

QUESTION 8 You have been tasked with advising the senior management on whether to invest in a project that will involve the company purchasing a new piece of high-spec software to enable an increased efficiency in supply and demand control. Their main concern is how long it will take for the project to return the initial investment. The software will cost $ 95,000 and should yield cost savings of $27,000 per year. Calculate the payback period of the investment if the discount rate is 10%