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Figure 13-6 JD, Inc., Is Considering the Purchase of Production Equipment That

Question 52

Multiple Choice

Figure 13-6
JD, Inc., is considering the purchase of production equipment that costs £400,000. The equipment is expected to generate annual cash inflows of £125,000. The equipment is expected to have a useful life of five years with no salvage value. The firm's cost of capital is 12 per cent.
-Refer to Figure 13-6. JD's payback for the project is


A) 2.9 years.
B) 3.2 years.
C) 3.25 years.
D) 4.2 years.

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