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(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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