The Bonkers Corp. is contemplating the purchase of a piece of equipment with the following cash flow data: $$\begin{array} {cccc}
&&&\text { Incremental } \
\text { Year } & \text { Initial Cost } & \text { Contribution }&\text { Terminal Value }\
\hline0&\$ 84,000 \
1 & & \$ 30,000 & \
2 & &25,000 & \
3 & & 20,000 & \
4 & &15,000 &\$9,000
\end{array}$$ Ignoring income taxes, what is the payback period?

Question

The Bonkers Corp. is contemplating the purchase of a piece of equipment with the following cash flow data: $$\begin{array} {cccc} 
&&&\text { Incremental } \
\text { Year } &  \text { Initial Cost } & \text { Contribution }&\text { Terminal Value }\
\hline0&\$ 84,000 \
1 & & \$ 30,000  & \
2 & &25,000 & \
3 & & 20,000  & \
4 & &15,000 &\$9,000
\end{array}$$ Ignoring income taxes, what is the payback period?

Quizplus · Accepted Answer

The Answer of The Bonkers Corp. is contemplating the purchase of a piece of equipment with the following cash flow data: $$\begin{array} {cccc} 
&&&\text { Incremental } \
\text { Year } &  \text { Initial Cost } & \text { Contribution }&\text { Terminal Value }\
\hline0&\$ 84,000 \
1 & & \$ 30,000  & \
2 & &25,000 & \
3 & & 20,000  & \
4 & &15,000 &\$9,000
\end{array}$$ Ignoring income taxes, what is the payback period?

The Bonkers Corp Ignoring Income Taxes, What Is the Payback Period? A) 3

The Bonkers Corp Ignoring Income Taxes, What Is the Payback Period?
A) 3