(Ignore income taxes in this problem. )Overland Corporation has gathered the following data on a proposed investment project: The company uses straight-line depreciation on all equipment.Assume cash flows occur uniformly throughout a year except for the initial investment. The payback period for the investment is:

Question

(Ignore income taxes in this problem. )Overland Corporation has gathered the following data on a proposed investment project:  The company uses straight-line depreciation on all equipment.Assume cash flows occur uniformly throughout a year except for the initial investment. The payback period for the investment is:

Quizplus · Accepted Answer

Payback period = Investment required ÷ Annual net cash inflow
= $150, 000 ÷ $40, 000 per year = 3.75 years

(Ignore Income Taxes in This Problem