Question
The Keego Company is planning a $200,000 equipment investment that has an estimated five-year life with no estimated salvage value. The company has projected the
The Keego Company is planning a $200,000 equipment investment that has an estimated five-year life with no estimated salvage value. The company has projected the following annual cash flows for the investment.
| Year | Cash Inflows |
| 1 | $120,000 |
| 2 | $60,000 |
| 3 | $40,000 |
| 4 | $40,000 |
| 5 | $40,000 |
| Total | $300,000 |
Assuming that the cash inflows occur evenly over the year, what is the payback period for the investment? (Ignore income taxes in this problem.)
A. 0.75 years. B. 1.67 years. C. 2.50 years. D. 4.91 years.
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Personal Trainer Online Purchase Managerial Accounting
Authors: Carl S. Warren, James M. Reeve, Philip E. Fess
8th Edition
0324204604, 978-0324204605
