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Florian Co. is considering purchasing a new piece of equipment that will cost $600,000. The equipment has an estimated useful life of 8 years and
Florian Co. is considering purchasing a new piece of equipment that will cost $600,000. The equipment has an estimated useful life of 8 years and no salvage value. The equipment will produce cash inflows of $215,000 per year and net income of $90,000 per year. Florian requires a 10% rate of return.
What is the payback period for this equipment?
Select one:
a. 8.0 years
b. 3.75 years
c. 2.79 years
d. 6.67 years
e. None of the above
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