An initial investment of $180,000 is expected to generate $85,000 in annual cost savings over the asset's expected 3- year life. Assume straight- line depreciation and ignore income taxes. The payback period is:

Question

Quizplus · Accepted Answer

The payback period is calculated by dividing the initial investment by the annual cost savings. $180,000 / $85,000 = 2.12 years.

An Initial Investment of $180,000 Is Expected to Generate $85,000