Question
Orange Corporation has collected the following data about a proposed investment project: Investment in depreciable equipment $ 690.000 Annual net cash flows $ 76.000 equipment
Orange Corporation has collected the following data about a proposed investment project:
| Investment in depreciable equipment | $ | 690.000 | |
| Annual net cash flows | $ | 76.000 | |
| equipment life | 16 | year | |
| recovery value | $ | 0 | |
| Discount rate | 6 | % | |
The company uses the straight-line method of depreciation on all equipment. Suppose the cash flows are the same throughout the year except for the initial investment.
The payback period of the investment will be ?
Step by Step Solution
3.37 Rating (150 Votes )
There are 3 Steps involved in it
Step: 1
To calculate the payback period we need to determine how long it will take for the company to recove...
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Essentials of Managerial Finance
Authors: Scott Besley, Eugene F. Brigham
14th edition
324422709, 324422702, 978-0324422702
