Question
Oriental Company has gathered the following data on a proposed investment project: Investment in depreciable equipment $600,000Annual net cash flows $50,000Life of the equipment 20
Oriental Company has gathered the following data on a proposed investment project: Investment in depreciable equipment $600,000Annual net cash flows $50,000Life of the equipment 20 years. Salvage value $0Discount rate 14.00%The company uses straight-line depreciation on all equipment. The payback period for the investment would be __________.Payback Period: The payback period is a capital budgeting technique that calculates the time in which the investment will return the initial cost. The formula to calculate the payback period is: Payback period = Investment in depreciable equipment/ Annual net cash flows
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