Copa Cabana Corporation is considering the purchase of a new machine costing $30,000. The machine would generate net cash inflows of $12,000 per year for 5 years. At the end of 5 years, the machine would have no salvage value. Copa Cabana's cost of capital is 12 percent. Copa Cabana uses straight-line depreciation.
The investment's payback period in years is:

Question

Quizplus · Accepted Answer

$30,000 / $12,000 = 2.5 years.

Copa Cabana Corporation Is Considering the Purchase of a New