Mendez Company is considering a capital project that costs $16,000. The project will deliver the following cash flows: Using the incremental approach, the payback period for the investment is:

Question

Mendez Company is considering a capital project that costs $16,000. The project will deliver the following cash flows:  Using the incremental approach, the payback period for the investment is:

Quizplus · Accepted Answer

11ea7feb_d15c_9945_a768_1df11b1744f5_TB3570_00_TB3570_00_TB3570_00 The investment in the project is fully recovered in the 3rd year. To be more exact, the payback period is approximately 2.4 years [= 2 + ($2,000 ÷ $5,000)].

Mendez Company Is Considering a Capital Project That Costs $16,000