Question
(Ignore income taxes in this problem.) Z Company has gathered the following data on a proposed investment project: Investment in equipment.................................. $150,000 Annual cash flows...........................................
(Ignore income taxes in this problem.) Z Company has gathered the following data on a proposed investment project:
| Investment in equipment.................................. | $150,000 |
| Annual cash flows........................................... | $40,000 |
| Salvage value of equipment............................. | $0 |
| Life of the equipment....................................... | 10 years |
| Required rate of return.................................... | 10% |
The company uses straight-line depreciation on all equipment.
Required: (i) Calculate he payback period
A.
0.27 years
B.
3.75 years
C.
10.00 years
D.
2.13 years
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